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How to Start a Hair Extension Business

How to Start a Hair Extension Business

Hair extensions have been super popular for some time now. Celebrities use them to complete their red carpet look, but hair extensions also help with thinning hair, giving someone’s locks time to grow and get healthy – and they can hold a curl! Hair greatly affects how we feel about ourselves and how we perceive others.

Can you tell a Remy from another natural hair? Do you know the difference between a single and a double-drawn strand and have expertise with clip-ins, sew-ins, hair weave, beaded rows, and tape-ins? Are you looking for an opportunity to be your own boss? If you answered yes to most of these questions, then developing your own hair extension business is undoubtedly an inspiring option.  

Business Description

A hair extension business specializes in short and long-term hair replacement, weaving services, and wigs to both men and women. Hair extensions are most often used for aesthetic purposes to complement and instantly change a look and to support people with thinning or unhealthy hair. 

Industry Summary

According to IBISWorld, the hair replacement or weaving services industry is heavily reliant on the availability of disposable income and is on a solid rebound after a severe slump over the past few years. In 2021 it had a reported market size of $1.92 billion. 

Some of the most prominent players in the US hair extension market are So.Cap.USA and Mayvenn Inc. US Private label companies of note are Perfect Locks LLC  and Private Label Extensions, and  (Fortune Business Insights).

Related Industries

Hair Salon
Microblading
Wig Business

Industry Trends

According to Fortune Business Insights, the US hair extension market is forecasted to grow to a respectable $3.44 billion by 2028. This is primarily due to an expected decrease in unemployment and an increase in household income. 

It is anticipated that Remy hair – never before processed human hair of the highest quality – will enjoy the most significant boost due to its natural and organic image. By comparison, consumer interest in synthetic hair is expected to decrease.  The other driving factor for an increased demand for hair extensions is our aging population and, with that, a rising prevalence of hair disorders and thinning hair.

Target Market

We recommend you do your market research to understand your existing competition and distribution channels and identify gaps in supply. Hair salons should be high on your list as they are typically your key distribution channels. 

In terms of consumers, your target market is people between 20 and 65 who are interested in hair extensions as a fashion accessory or to enhance their looks. In fact, 34% of women claim they regularly use hair extensions as part of their beauty regime

You may concentrate solely on the distribution of hair pieces and extensions or offer a whole range of services such as consultations, the fitting, and maintenance of hair extensions as well. 

Checklist for Starting a Hair Extension Business

With so many important factors to consider and regulations to understand, starting a hair extension business can be overwhelming. To help make the process as seamless as possible, I’ve created this checklist to give you the steps on how to start your business right.

Step 1: Write a Business Plan

While not actually required, writing a business plan is an important step in launching a successful hair extension business. As the head of any business, it’s important to have an organized plan in place to outline financial goals, management and marketing strategies, and to create a long-term vision for the business.

Additionally, having a well-written hair extension business plan will be required if you are trying to secure funding as a bank or investor will be looking for details to ensure their investment is safe.

Related: How to write a business plan

Step 2: Name the Business

Coming up with a business name is fun, but difficult to find the right name.

If you are looking for tips, try to think of words or phrases that embody the style and selection of hair extensions you offer. Consider including aspects like color, texture, length, affordability, and quality in your name to better communicate what your business offers. Additionally, you might also use clever puns and wordplay to create a memorable name that not only reflects the services offered but is fun and out of the box.

Once you have a list that is narrowed down, be sure to check that name is available to use before registering it.

Related: Tips on naming a business

Step 3: Form a Business Entity

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a hair extension business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select Your Location

When deciding on choosing a location, you can either consider selling online extensions, which is a much less expensive option than opening a retail storefront.

However, if you are thinking of opening a physical store, consider choosing an area that doesn’t have too many competing hair extension shops and where more people may regularly need your product/services. For example, college campuses or salons might be ideal locations for advertising your business offline. Although online marketing is important, having a storefront could potentially reach more customers. Plus, it gives people the opportunity to try before they buy!

Step 5: Apply for Business Licenses and Permits

Hair extension licensing requirements differ depending on your location and the services you will offer, which can make getting started confusing. Some states like California don’t require licensing to sell hair extensions, while other states require a cosmetology license to install hair extensions.

In addition to hair extension specific licensing, there will be some general registrations, that will vary depending on the state. These typically include a business license, sales tax permit, retail certificate of occupancy, and Employer Identification Number.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a hair extension company is another.  Fortunately, the cost to start a new hair extension business can be relatively low, especially if selling online; however, funding to start a business can be difficult.  Banks are typically going to want the borrower to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Research Vendors

Opening a hair extension business requires having quality products for customers to purchase. Finding reliable vendors that you can purchase inventory in bulk will take some time, and they will usually require to see proof that your business is in the process of opening before they will provide wholesale pricing information.

Initially, the cost to stock inventory in a new store is quite an investment, so really dig into what your customers will want so your shelves have what they want to buy.

Step 9: Get your Marketing Plan in Place

There are several online and storefront strategies that are used by successful hair extension businesses.

Whether selling online or locally, a successful online presence is important. Consider a variety of online platforms such as blogs, websites, search engine optimization, online ads, and social media platforms like Facebook, Instagram, Twitter, and others.

Additionally, if selling at retail, look into creating in-store promotions such as discounts or complimentary samples to bring customers in the door and trying the products.

Don’t forget to emphasize the quality of your products when marketing, as it is one of the most important ways to retain customers and build trust in your brand.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 10: Get Business Insurance

Having the right insurance in place is necessary for an online or retail storefront hair business. Insurance not only protects the business, but it also protects the owners from potential loss.

Some policies to consider include general liability insurance, which protects your business from consumer injuries or damages caused by your products. Additionally, product liability ought to be taken out if you’re manufacturing the items you sell online or in-store. It is also prudent to get coverage for property damage and any equipment used in the process of creating extensions, such as specialized tools and machinery.

Even if you’re just starting out with a small hair extensions business, having the right coverage helps provide financial protection in the event of an accident or lawsuit.

Related: Types of insurance your business may need

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Common Questions When Starting a Hair Extension Business

How much does it cost to start a hair extension business?

If you decide to start an online hair extension business, your start-up and ongoing costs will be very low. You can efficiently run your business from home unless you want to take advantage of wholesale prices and need extra space to stock large quantities. In that instance, your main costs will be your inventory and setting up and maintaining your online presence. Suppose you are going to outsource your website development, including CRM and order management capability, with budget costs of around $4,000. Don’t forget to budget for shipping, packaging, and commission. 

If you opt for a brick-and-mortar store, your initial outlay can be between $2,000 – $100,000, depending on your location and the store size.

Consider a few of the following expenses:
– The lease of suitable premises. You can start small here, but the location should be handy, ideally with good foot traffic. 
– Insurance and utilities, business licenses
– Initial inventory – costs depend significantly on what kind of hair extensions you offer.
– Hair extension tools such as pulling needles, sectioning clips, straighteners, curling tongs, brushes, etc.
– Setting up the retail space – shelving, seating, wash basins, points of sale, mirrors, security cameras, etc.

Is it profitable to sell hair extensions?

It is difficult to determine an expected income for a hair extension business owner. First, decide what kind of hair extensions you want to specialize in and whether or not you wish to offer all the services supporting the sale of hair extensions. As an indication, an employed hair extension specialist earns, on average, $18/hour. 

In short, your income will depend significantly on your target market and whether you sell your products at the right price point with the right profit margin. Therefore, developing a business plan and budget – and sticking to it – will be crucial to the success of your business – and your income.

Are there grants to start a hair extension business?

It’s extremely rare to find a grant to start a hair extension business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.

What skills are needed to run a hair extension business?

Professional know-how. Even if you decide to distribute hair extensions solely, ensure you stay up to date with industry trends and innovations. Understand what the market is doing, what novelty items are being introduced, and what manufacturers can supply your products.  

If you offer all hair extension services, we highly recommend you learn the trade through a mentor, apprenticeship, or accredited program.

Useful connections:
Remy Hair Importers Association of America
MBaise Association
American Hairloss Council

Customer service and interpersonal skills. This is a vital skill and one you need to enjoy. Especially if you will be offering hair extension services. You will help your customers achieve their desired appearance. Empathy and care are essential traits when assisting clients suffering from hair loss, for example. The ability to advise clients professionally on style, fashion, and hair extension options is equally essential.  

And don’t forget to maintain a solid relationship with your suppliers, hair stylists, and beauticians.

Excellent Marketing skills. How will your target market find you – how will you grow your customer base? We recommend investing in good imagery and developing a consistent, authentic comms and marketing strategy and branding that speaks to your target market. Consider getting influencers to wear your gear and promote it to their followers.  

In addition, an outstanding customer experience will ensure repeat business and help expand your brand through word of mouth. 

Final thoughts

Out with bad hair days! A hair extension can instantly change the wearer’s appearance, whether this transformation is for fun, style, or medical reasons. 

This can be a hugely rewarding business and service. And with a viable option to start your business small and from home, setting up your own hair extension business doesn’t come with the burden of extensive financing. 

Greg Bouhl

Greg Bouhl

Welcome! My name is Greg Bouhl, and I have over 21 years as an entrepreneur, educator, and business advisor, where I worked with over 1,600 entrepreneurs to help them start and grow their businesses.

As a small business advisor, I got fed up with clients finding inaccurate and outdated information when they were researching how to start a business online, so I launched StartingYourBusiness.com to be a trusted resource.

I'm constantly adding and revising this site, but if there is a question you have about starting a business or need help finding something, please ask!

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