How to Start a Beauty Salon

Part 1 - How to start a Beauty Salon business - Background

Beauty salons have become increasingly popular as disposable income has risen. Salons are as much a social institution as they are a way to improve the appearance of customers. The beauty industry generated $62.46 billion in 2016 alone, and it’s numbers have consistently gone up for the past 13 years.

Our guide is in 3 parts:

• Part 1 - How to start a Beauty Salon business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a beauty salon?

Experts recommend you have at least $60,000 before opening a beauty salon, but this number is highly dependent on the property costs in your area and the number of chairs you plan to have (1,000 square feet will fit about 6 chairs.) Equipment will typically cost around half the initial capital, or around $30,000. The costs of licensing to operate vary widely (anywhere from $100 to $2,000.)

Advertising costs should also be factored in, with television time costing up to $15,000. If you choose to use a pay-per-click model for digital ads, your costs may be substantial due to the ubiquity of beauty salons.

What are the ongoing expenses for a beauty salon?

Owners can expect to pay for the following expenses:

• Salaries

• Supplies

• Advertising

• Equipment replacement (wear and tear on chairs, dryers, etc.)

• Building costs (e.g., utilities, permits, upgrades)

Who is the target market?

Beauty salons will profit most from repeat clientele. You’re looking for men and women who are willing to pay more for quality work, and those who need set services every month.

How does a beauty salon make money?

Beauty salons make money by exchanging beautifying services for money. It is important to find the right profit margins for your services. Some salons use a base rate for coloring or haircuts. A good rule of thumb is to look at the pricing structure of other salons in the area, and aim for a middle-of-the-road approach. Customers do have their budget limits, but they may become instantly suspicious about the quality of work if the rates are too low.

How much can you charge customers?

The exact amount to charge customers will be dependent on where you are, who your clientele is, and the experience of the stylists. Celebrities may pay up to $800 for a hair service and $200 for their nails. Typically though, you’ll want to set your stylists up on a tier setting, with junior stylists charging around $30 for a cut, intermediates charging around $40, and masters charging $50 to $60. Manicures and pedicures can be anywhere from $15 for a basic treatment to $30 for a spa manicure.

How much profit can a beauty salon make?

On average, profits can be up to 15% of the total amount your salon brings in. You can also make additional money selling retail products, such as specialty shampoos and conditioners. Should you want to make additional money, you’ll need to adjust your service prices, but increasing prices may scare off customers.

How can you make your business more profitable?

Look for the ways you can make your customers look better based on their needs. For example, if you have a lot of middle-aged women coming in, offer more services to lift and refresh aging skin. Look into bringing in cosmetic specialists from time to time for special events (e.g., offer Brazilian hair straightening for a month.) There are a variety of new trends that hit the market, like vampire facelifts and sunset coloring that can drive interest and set your salon apart. You can also franchise if your business grows large enough, but 99% of beauty salons have a single location.

Day-to-Day and Growth

What happens during a typical day at a beauty salon?

To a certain extent, owners can decide how much they want to be involved in the business. An owner may hire managers to ensure the salon is running smoothly, while they concentrate more on investing in the new ventures and trends. However, here are some of the usual duties of beauty salon owners:

• Finding a space with a good deal of foot traffic

• Advertising the salon (web, print, television, etc.)

• Ensuring inventory is stocked

• Analyzing current and future customer demand

• Performing styling duties

• Managing employee schedules

• Ensuring cleaning procedures are followed

What are some skills and experiences that will help you build a successful beauty salon?

Typically, the most successful beauty salons have owners who understand the ins and outs of how a beauty salon functions. Therefore, experience working in a salon can be very beneficial. Many employees will not only need a license to operate in the US (education requirements vary from state to state), but they need to seek out additional education to keep their license as time goes by. Owners should know and understand how each service should be administered to keep quality levels high. There will also be a certain amount of intuition needed, alongside standard business sense, to keep clients impressed both in person and behind the scenes.

What is the growth potential for a beauty salon?

Depending on the space you get, the potential can be unlimited. Along with common menu items like waxing, manicures, and pedicures, consider either offering or leaving the door open for spa features like steam baths, or skin treatments like Botox.

A beauty salon’s growth is rooted in being able to keep up with the market. Your ideal customer may want standard and familiar (e.g., a manicure) or something a little more risqué (e.g., vampire facelifts.)

Once your business has a steady flow of business, it is possible to open a second or even third location to maximize the reach of your business.

What are some insider tips for jump starting a beauty salon?

You’ll likely need to give discounts at the beginning to entice customers to stray from their usual place to come to yours. The double-edged statistic to remember is that a beauty salon can experience up to 25% turnover in any given year. That’s a decent amount of customers to come and go, but it’s helpful for salons trying to gain a foothold in the market.

Concentrate on defining the customer you want, and then start finding out where those people are. Partner with other businesses to start getting more referrals, and hire someone who can make your website really stand out — both when a customer searches for salons in their area and after they click on your website.

How and when to build a team

Your stylists and technicians will make or break the business, so they need to be both friendly and exceptionally competent. It is better that they’re capable rather than overly social, but you really do need both to keep people coming back. Teams need to be built at the very beginning, and additional hiring should only occur if new services are being offered, the space has been expanded, or the demand calls for it.

Part 2 - Is a Beauty Salon business the right fit for you?

Part 3 - Action plan to launch your Beauty Salon business in 90 days