- A hair salon can be a steady, profitable business, but before you open one, you need a strong business plan and preparation.
- Finding a niche for your salon helps you attract a loyal client base.
- The most important things a salon needs to succeed are a good culture, knowledgeable employees and an understanding of what its services are worth.
When it comes to owning a business, a hair salon is a pretty safe bet – the beauty industry is valued at $532 billion per year. Beauty is also a steady business, often remaining unaffected during economic recessions.
But even if you have the styling skills, launching your own business can be a challenging process that requires patience and know-how. The cost of opening your own salon is around $62,000 for a basic setup, but it can go up to $500,000 or even more. No matter how much you invest in your new business, you'll want to do everything you can to ensure your salon's success.
The cost of opening a salon
Before mapping out your finances and securing funding, you'll want to consider what, exactly, you need funding for. Here are some common salon setup costs for aspiring owners:
- Licenses and permits: To open a salon, you'll need a business license and any permits required in your area. If you plan on selling products, you'll also need a seller's permit.
- Real estate: You'll have to find a place to either rent or buy. If you choose to pay a monthly lease, you'll likely have to provide a security deposit upfront.
- Payroll: This involves salaries or wages for the employees you hire, and all the associated benefits you choose to offer.
- Salon equipment: A salon requires a ton of equipment, like beauty supplies, sinks, chairs and hair dryers. You may also need a POS system, computer, business phone system and more.
- Inventory: If you plan to sell cosmetics or other products, you'll want to stock up on your inventory before opening.
- Insurance: To legally cover your business, you'll want to set aside money for a decent insurance plan.
These are just some of the many costs of opening a salon. Keep a checklist of possible salon expenses so you know what to account for when acquiring funding.
Financing for a salon
Salons are often seen as high-risk businesses, and many banks are hesitant to invest. However, there are many alternatives to traditional loans. Here are some popular financing options for salons.
SBA loans
With low rates and fast payback periods, SBA loans are perfect for small startups. However, these loans are relatively competitive, so you'll need a strong credit score to qualify. Also, if you need immediate funding, you'll want to look elsewhere.
Microloans
Microloans are much easier to attain than traditional SBA loans, because you don't need an expansive credit history or time in business. SBA microloans can be up to $50,000. Just make sure you have a solid business plan in place before trying to secure your loan.
Alternative lenders
Alternative lenders tend to be much more accessible (and immediate) than other sources of capital. If you need quick money, you might consider a term loan, asset-based loan, credit card or business line of credit.
Equipment financing
You need a decent amount of equipment to run a salon, like chairs, sinks and hair dryers. When you're starting out, it can be difficult to afford all these purchases. With equipment financing, you'll receive a loan to front these payments, so you can start off on the right foot without breaking the bank.
Rather than buying all-new equipment, consider leasing it to reduce the upfront cost. Some lenders also offer equipment financing, which uses the equipment as collateral; you would then make regular payments until the value of the equipment is repaid with interest.
How to develop a salon marketing plan
Marketing is an essential process for every business, but certain tactics work better for some businesses than others. When opening a local salon, you'll want to focus on becoming a part of your community. Since you're a brick-and-mortar business (i.e., you operate out of a physical location), building your local following is crucial for you to attract and retain loyal clients.
Salon marketing requires technique and consistency. Here are some tips for marketing your salon:
- List yourself in online directories. To show up in digital searches, you'll have to make sure your business is listed in online directories.
- Manage online reviews. Consumers tend to trust online ratings and reviews to vet local businesses. It's important to address every review you receive – especially the bad ones.
- Partner with local small businesses. Partnering with another business in your community will help you broaden your reach and build a reputation for your brand in the area. Host events or coordinate deals with your partner businesses to offer your customers an exclusive experience.
- Offer referral discounts. If an existing customer recruits another client to your salon, you should reward the recruiter with some sort of discount. This will encourage people to spread the word about your business.
- Create loyalty incentives. Loyal customers deserve special treatment. To show your clients you appreciate them, create incentives like discounts, punch cards and special promotions.
- Utilize social media. Your social media is a place for customers to get to know you on a more personal level. Connect with your community by following other small businesses in the area, engaging with your target market and sharing behind-the-scenes content (like before and after photos of clients' haircuts) to build your credibility and cultivate brand awareness.
Opening a salon
Check out these 10 expert tips to start off your salon on the right foot.
1. Create a salon business plan.
Writing a business plan should be your first step when starting any business. It provides you with a clear objective, outlines how you will achieve that objective, and gives you a good idea of what you need to do to be successful. [Read related article: How to Write a Business Plan]
"A business plan is key to starting a salon," said Ali Ryan, owner of The Dry House. "The plan offers a road map for salon owners to follow and helps entrepreneurs consider all areas of the business. A business plan makes sure you set up a metric for success and consider the financials before you invest huge amounts of time and money in a new salon."
Make sure you have a good understanding of the existing salon market in your area, including how large it is, if it is growing and the trends. This will help you to plan exactly how you will compete against other salons.
You should also have a strong idea of your target audience, said Michelle Lee, co-owner and master designer of Salon Eva Michelle. "Think about what kind of salon you want to open [and] what culture you want."
2. Research your local laws and regulations.
Laws and regulations vary by where you live and what type of salon you are opening. For example, a salon that strictly provides hair services will require different licenses from a salon that also offers facials or massages.
"Do your research," said Shanell Jett, owner and stylist at Jettset Mobile Studio. "Ensure that you are complying with the state laws and regulations. If you have to make some adjustments to your plan because of regulations and laws, do so early so that you can avoid potentially having to stop your operation later or [having to pay] a fine."
These are some of the common licenses, regulations and permits required for salons:
- Salon license
- Cosmetology license(s)
- Employer Identification Number (EIN)
- Building permit
- Sanitation
- OSHA requirements
3. Find a way to make your salon stand out.
"With salons on every corner, even in small towns, entering into the market with a specialty or service niche can dramatically increase buzz and press about your opening," said Pamela Jeschonek, owner of Everyday Esthetics Eyebrow Studio.
Think about what makes your salon unique. Is it the services you offer? Your attentive staff? Your customized experiences? Whatever it may be, try to make it a focal point of your identity and grow your business from there. In other words, find your niche. Growing your business in a niche market is much easier than trying to succeed in a large, general market.
A niche market gives you more security against failure and a chance to find out what works well (and what doesn't) for your business by allowing you to interact more closely with your customers.
"Even if you do offer many services, promoting a niche or specialty service not only will help you attract a very loyal client base, but will instantly lend credibility to your salon as the experts in your niche space," said Jeschonek.
4. Talk to distributors.
To obtain products for your salon – such as chairs, mirrors, washing and drying stations, shampoo, conditioner, pins, and brushes – you will need to contact a distributor. You can find local, wholesale or national distributors with local agents.
For larger items, like chairs and dryers, you will need to work with a large wholesale distributor like Belvedere Maletti or Takara Belmont. You can purchase smaller items from a local distributor or directly from a manufacturer, like Paul Mitchell or Estée Lauder.
When you begin your distributor search, remember to shop carefully and consider every prospect. Look at price points and the customer support (like advice or consulting) different distributors offer, and ask if they offer any deals or perks.
5. Develop a solid client base.
As a salon owner, you should place your clients and their experience at the top of your priority list. This will create return customers who, over time, will form a reliable customer base.
"My No. 1 tip for aspiring entrepreneurs before they open up a salon is to have a number of professional clients of your own that will cover your overhead," said speaker and entrepreneur Sandra LaMorgese. "With a solid client base of your own, you'll be in a better position to call the shots."
6. Choose the right location to open your salon.
Whether you buy a building or rent a retail space, your location is one of the biggest expenses of opening a salon, and there are many factors to consider when making this decision. It should be in a well-populated area and easily accessible by car or public transportation. Also make sure you are far enough away from competitors that offer the same services as your salon.
"Secure a solid location with plenty of parking," said Jim Salmon, vice president of business services at Navy Federal Credit Union. "If you make it convenient for clients to visit your salon, you'll have more customers, which in turn means more revenue to pay off your initial loan and to put toward growth expenses."
7. Hire a designer.
If you have the financial means, hiring a designer to help you create your salon can reduce stress and ensure an appealing, functional workspace. A designer can help you determine an overall look and feel that is consistent with the image you want to project.
"Work[ing] with a designer or space planner [can] ensure you are maximizing your revenue potential for the space," said Miriam Deckert, marketing director at SalonSmart. "If construction work is needed, try to negotiate those costs in your lease agreement."
Deckert recommends taking advantage of space in the center of the salon with double-sided stations or couches for waiting guests. You should know the dimensions of each area before you shop for equipment or furniture.
8. Focus on your staff.
Your salon is only as good as the people you employ to help run it. Because beauty is such a personal industry, it is vital to retain a skilled, knowledgeable and friendly staff.
"I would advise any new salons to invest time in the training and motivation of the staff," said Jennifer Quinn, digital marketing executive at Phorest Salon Software. "Your salon will be built around your stylists and technicians, [so] ensuring they are comfortable with upselling products and other treatments across the brand is the difference between success and failure."
Taking the time to train your employees thoroughly will help your business run more smoothly and maintain a professional reputation.
"Being passionate about your staff's growth is important," said Lee. "Be a leader, not a boss."
9. Think about your clients.
"Create a vision for how you want clients to feel, what you want them to experience and what adjectives clients will use when describing their experience," said Samira Far, founder of Bellacures. "This will help in developing a look, feel and atmosphere."
As you start out, gather feedback from your clients about what they like and don't like about your salon. Outline in your business plan how you intend to meet clients' needs and wants as much as possible and show your customers that you value and act on their input.
10. Charge what you're worth.
It can be difficult to decide how much to charge for your services, particularly when you are just starting out with your own business. After you do some research and get a ballpark idea of what someone with your level of training could charge, you should carefully consider your own skills and training and determine a price based on that – not what others in your area are charging.
"You don't know anything about them or their skill set," said Sheryl Miller, owner of Fringe Hair Art. "I charged $60 a haircut when I first opened in a town where the most expensive haircut was $38. I had 25 years of training and education to get here. Some people thought I was crazy and wouldn't get it. Not only did I get it, [but] I have since raised [prices] to $70 and keep billing. If you are great at what you do, people will pay for it."
Kiely Kuligowski and Brittney Morgan contributed to the reporting and writing in this article. Source interviews were conducted for a previous version of this article.