How to Start a Wig Store
The wearing of wigs can be traced back all the way to ancient Egypt. Back then, people shaved their heads then wore a wig for sun protection. By the 4th century, wigs were worn to show rank – and to disguise headlice.
These days, wigs are often worn for medical or religious reasons. However, they have also become a hot fashion accessory, allowing the wearer to quickly change a hairstyle to match a look or to follow a fashion trend.
If you are looking for a creative way to assist people in changing their appearance with wigs or hair pieces, take pride in excellent customer service, and want to own your own business, starting a wig store can be a viable and exciting option for you.
Business Description
You will retail a range of wigs, hair extensions, and hairpieces for medical and aesthetic purposes. You will be knowledgeable about and advise customers on the differences between synthetic wigs, lace wigs, human hair, or blended materials and assist with finding the right fit. Your wig business may specialize in party wigs, fashion wigs, or wigs worn for medical or religious reasons and imitating a person’s natural hair as closely as possible.
Industry Summary
According to IBISWorld, the number of wig and hairpiece stores has recently declined. That said, North America dominates this market globally – there has always been a higher demand for wigs and hairpieces in the USA compared to any other country, and revenue has been steadily growing over the past decade. After a slight dip in 2020, it has rebounded well to almost $370 million in 2022.
Even so, this industry is highly competitive, and although barriers to entry and regulation levels are considered low, it pays to complete a thorough competitor analysis and business plan. The industry consists of a mix of brick-and-mortar stores and online sellers. Both business models have positives and negatives, and likely have quite different customer bases.
Related Industries
Clothing Boutique
Hair Extension Business
Hair Salon
Hat Store
Industry Trends
IBISWorld forecasts annual market growth of 1.2% to the year 2025. A recent research report by Fortune Business Insights highlights growth opportunities for the wig and hairpiece industry. One of the main drivers in the US is its aging population and, with that, a surge in health and age-related hair loss. The report also identifies a heightened demand for relatable wigs (imitating a look of TV personalities and characters) and an increased need for medical treatment, especially an increase in cancer patients needing chemotherapy.
Target Market
We recommend you do your market research to ensure you understand your existing competition and identify gaps in supply.
You may specialize in wigs and hairpieces for practical uses such as hair loss. Arizton Advisory Intelligence notes that males and females in the 35 – 44 age group make up the most significant industry share, for example. Especially for patients suffering from rapid hair loss due to cancer treatment, wigs can make them feel like themselves again. For this market, a brick-and-mortar shop provides a better opportunity for consultations and fittings to ensure a wig or hairpiece is the perfect fit.
You may decide to retail wigs and hairpieces for leisure, either as a fashion accessory to enable a non-permanent change of style and look or as part of a party costume. Especially party wigs lend themselves to an online setup.
Checklist for Starting a Wig Store
Starting a wig store requires a lot of proper planning. Not only will you need to think about obtaining the appropriate licenses and permits, but also finding vendors and manufacturers, setting up the retail space, marketing, and more.
It can be overwhelming to consider everything that needs to be done, but to help get you started on the right track, I have a checklist to help launch your wig store.
Step 1: Write a Business Plan
Starting a wig store is an exciting moment, but one that requires careful planning if you want to be successful.
A business plan is the driving document behind any successful new business as it is not only used to raise funding, but is also the business’s roadmap where your financial planning and business strategies are tested on paper.
Having a business plan in place can save you from costly mistakes down the road – making the investment of time now well worth it!
Related: How to write a business plan
Step 2: Name the Business
When it comes to naming your wig store, there are a few key things to consider.
In general, you will want to make the business name memorable and if possible represent the products that you are selling. It’s important to find a name that stands out from other competitors in the space as well, so think of something unique, but not too unique as the name should be easy to customers to pronounce.
Once a few candidates are found, the next step is making sure the name is available to use.
Related: Tips on naming a business
Step 3: Form a Legal Entity
A legal entity (also referred to as a business structure or business entity) 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 wig store, 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.
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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
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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
Figuring out the best location for a wig store will ultimately rely on the target market.
A physical store location isn’t as critical for drop-shipping or an online store, as your primary concern is having somewhere secure to store and ship inventory.
If your business model revolves around local wig shopping there are different demographics to consider. One is medical wigs for cancer patients and being close to a cancer center, or medical park may be advantageous. If you plan to focus on customers desiring to improve their appearance, locating in a high-volume or trendy part of a shopping district may be the better fit.
Related:Â Tips for choosing a business location
Step 5: Apply for Business Licenses and Permits
At this stage, it’s time to start registering the business with the appropriate agencies. The licenses that you may need will vary depending on where your business is located and any services offered.
For starters, if your wig salon plans to offer cut and style services a cosmetology license is typically going to be required. In addition, there will be general licensing requirements such as a sales tax permit, occupation permit, and Employer Identification Number (EIN).
Related:Â 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 wig store is another. Â Fortunately, the cost to start a new wig store can be low provided the retail space renovations are low. Regardless, funding to start a business can be difficult as 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:Â Finding the money to start a business
Step 7:Â 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.
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Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
One of the keys to marketing a wig shop is to fully understand how you are adding value to people’s lives. There are plenty of wig shops out there, but yours can stand out by presenting a professional image and emphasizing the quality of materials used.
Make sure to feature testimonials from satisfied customers, as well as photographs that accurately show off the variety of colors and textures available. Additionally, offer discounts and special deals throughout the year in order to increase customer loyalty – nothing motivates people like saving money! Last, branching out into social media platforms like Facebook, Instagram, Tiktok, etc. with regular updates about new arrivals and specials; is a great way for potential customers to get their first impression of your business.
Related:Â 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 9: Get Business Insurance
Wig shops typically require a range of insurance policies to protect the business, its employees, and its customers.
At the top of the list is general liability coverage to address any claims resulting from accidents or injuries that occur in the shop. Property insurance can protect against the loss of inventory, furniture, equipment, etc. in the event of theft, fire, vandalism, or natural disasters. Worker’s compensation insurance is necessary to provide financial support if an employee becomes injured while working at the wig shop.
Common Questions When Starting a Wig Shop
How much does it cost to start a wig store?
If you decide to start an online wig store, 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, one of the main costs will be setting up and maintaining your online presence. If you are going to outsource your website development, budget costs of around $2,500.Â
If you opt for a brick-and-mortar store, your initial outlay can be anything between $10,000 – $18,000, depending on your location and the store size. Consider the following expenses:
-The purchase, lease, or rent, of suitable premises. They won’t necessarily need to attract foot traffic but should be easily accessible.
– Insurance and utilities, business licenses
– Initial inventory
– Shop fit-out, mannequins, shelving, points of sale, mirrors, security cameras, etc.
How profitable is a wig store?
It is difficult to determine an expected income for wig store owners. First, decide what kind of wigs you want to specialize in. Human hair wigs can cost between $60 and $450, synthetic ones range from $40 to $160, and wigs with blended materials cost between $100 and $140. What overheads do you need to cover?Â
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 wig store?
It’s extremely rare to find a grant to start a wig store. 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 wig store?
Retail experience. Previous experience in the retail industry will serve a wig store owner well. You’ll have a good understanding of the tricks and challenges of managing a store, understand pricing and inventory, and will be able to plan for specific customer segments and seasonal demands, for example.
Customer service and interpersonal skills. This is a vital skill and one you need to enjoy. Empathy and care are essential traits when dealing with clients dealing with hair loss and illness, for example. And don’t forget to maintain a solid relationship with your suppliers, hair stylists, and medical professionals.
Business management experience. Previous experience in hiring, training, and managing employees will benefit any shop with staff. In addition, a solid understanding of accounting practices and an ability to negotiate supply contracts will also be invaluable.
Ensure you make time to keep up to date with the latest industry and fashion trends as well.
Useful resources:
The American Wig Association
National Wigs for Cancer Society
Final thoughts
A wig or hairpiece can instantly change the wearer’s appearance, whether this transformation is for fun, style, or medical reasons. Especially for people suffering from extensive hair loss, it provides a sense of consistency and privacy, preventing well-meant questions relating to appearance or diagnosis. Regardless of the purpose of a wig, this can be a hugely rewarding business and service. And with its comparatively low start-up costs, owning your own wig store doesn’t come with the burden of extensive financing.
