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A Step-by-Step Guide on How to Open a Salon?

Published December 21, 2023 Salon
How to Open a Salon
6 Best Tips For Starting A Profitable Coffee Shop
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“Quick summary” If you want to establish a new business, specifically a salon, you're in good company: The beauty business is valued at more than $56 billion per year, with hair care being the most profitable component, with 86,000 facilities nationally.

But what exactly will it be? A full-service beauty parlor or spa, or perhaps a hair salon, nail salon, or barbershop?

This is sure to be an important read for you regardless of the type of salon you own. Despite inflation in 2023, the salon sector is growing at a breakneck pace. There has never been a better moment to open a salon than now, since people are spending an increasing amount on their beauty and hair-care needs.

But let's get right to the point. Even now, a lot of salon enterprises fail, and the primary cause of salon startup failure is inadequate planning.

Don’t worry, we have compiled a detailed checklist on how to open a salon for your rescue. It includes a step-by-step guide.

So, without any further ado, let’s get started.

A Step-by-Step Guide on How to Open a Salon?

In this competitive time, starting and managing a successful business is not easy. But, a quick and concise checklist always comes in handy and helps you get started with the business. 

Let’s find out what a quick salon business startup checklist looks like: 

A Step-by-Step Guide on How to Open a Salon?
  • Choose Your Niche: Decide on the type of salon you want to open (e.g., hair salon, nail salon, spa). To make the right choice, research your target audience, competition, and location. 
  • Curate a Detailed Business Plan: Create a detailed business plan that outlines your salon's concept, services, pricing, and financial projections.
  • Legal Requirements: Register your business and select a legal structure (e.g., sole proprietorship, LLC, corporation). Get the necessary licenses and permits, like a cosmetology license and a business license to get started with the salon business.
  • Location and Design: Find a good location with decent foot traffic and visibility from your target customers. Plan the salon layout, including workstations, waiting areas, and storage, while following local zoning and building codes.
  • Secure Financing: Calculate your startup costs and establish a budget. Explore financial options, such as personal savings, loans, or potential investors, to cover initial expenses.
  • Supplies and Equipment: Buy salon equipment and supplies like chairs, mirrors, styling tools, and other crucial supplies and equipment to start your salon business. 
  • Hiring and Training Best Professionals: Hire skilled professionals who hold the necessary licenses and expertise to handle your customers and overall business. Provide training to keep your team updated with the latest industry trends and techniques.
  • Branding and Marketing: Develop a brand identity, including a salon name, logo, and visual style. Create a marketing plan with a website, social media presence, and offline advertising.
  • Salon Services: Determine your menu of services and set pricing considering all the factors and your target market as well. Consider offering promotions or loyalty programs to attract and retain clients. 

By simplifying the process and focusing on these steps, you can lay a strong foundation for your salon's success.

The Business Plan for a Salon

Writing a salon business plan is among the most crucial phases in opening a salon. The plan provides you with a road map to follow and, if necessary, to present to funding sources to secure funds for your firm.

The following sections ought to be included in your business plan:

  • Executive Summary: To help readers rapidly grasp the most important information about your salon business, this part should provide a summary of your whole business plan.
  • Overview of the Company: The reader will learn about the history of your hair salon and the particular services you provide in this area. 
  • Industry Analysis: In this section, you will record important details regarding the salon sector. Perform market research and record the size of the industry as well as the trends that are influencing it.
  • Customer Analysis: You will list the characteristics of your ideal or target clientele in this area, along with their demographics. 
  • Competitive Analysis: In this section, you will list the main direct and indirect rivals you expect to deal with as well as your strategy for gaining an edge over them. 
  • Marketing Strategy: The four Ps—Product, Pricing, Promotions, and Place-should all be included in your strategy. Coping up with trends and relevant marketing techniques for your salon business is very important. 
  • Product: Choose and record the goods and services you will provide. 
  • Prices: Clearly state how much our services cost, making sure it's fair and matches what others charge.
  • Place: Put our salon in a busy area where lots of people live and work, so more people see and visit us, boosting sales.
  • Promotions: Use social media like Instagram and Facebook, team up with local influencers, and join community events to tell people about our salon and offer special deals.
  • Operations Plan: Make sure everything runs smoothly every day with good software, hiring the right people, and having the best tools, so clients are happy and keep coming back.
  • Management Team: The history of the management team at your organization is covered in this section. 
  • Budgetary Plan: Lastly, the budgetary strategy consists of What initial expenses will you have to pay? How will your salon turn a profit? What are your anticipated five-year revenues and expenses? Does your firm need to raise money to get off the ground? How will you finance your business? 

How Much Does It Cost to Start a Salon

The cost to start a salon business can fluctuate extensively based on location, dimensions, salon type, and the number of customers, staff, and equipment required. On average, the initial investment can range from $50,000 to $250,000 or potentially surpass.

Let’s find out about the comprehensive cost breakdown to start a salon business: 

Cost Item Estimated Cost Range
Salon Space and Renovation $20,000 - $100,000
Furniture and Equipment $10,000 - $50,000
Supplies and Products $5,000 - $15,000
Licensing and Permits $1,000 - $5,000
Insurance $1,000 - $3,000
Professional Staff Recruitment and Training $5,000 - $15,000
Branding and Marketing $3,000 - $10,000
Website and Online Presence $1,000 - $3,000
Booking and Scheduling Software $500 - $2,000
Utilities and Rent Variable (monthly expenses)
Grand Opening Promotion $1,000 - $5,000
Initial Inventory $2,000 - $10,000
Miscellaneous Expenses $2,000 - $5,000
Working Capital (3-6 months) Variable (to cover operating costs)

Total Estimated Cost to start a salon business: $50,000 - $250,000 or more

Business Licenses

For you to start a salon business, you will normally require many licenses and permissions to assure legal compliance and operation. The exact prerequisites can vary based on your location and the services you intend to offer. Nonetheless, here's a comprehensive yet general catalog of licenses and permits you might need:

  • Business License: Essential for official recognition, registering your company mandates adherence to state and local government norms. Requirements may vary, but typically, details like your business name, address, and owner's particulars are requested.
  • Salon License: In the majority of states, running a salon calls for a specific license. This entails filling out an application, paying a charge, and passing a test on salon policies and procedures.
  • Cosmetology Licenses: In the state where the salon is located, stylists must possess a cosmetology license. This calls for passing written and practical tests in addition to completing a predetermined amount of training hours-typically more than 1,500 hours. 
  • Building Permissions: You'll need building permits to carry out any construction work if you're building or remodeling your salon. Requirements vary according to your location. 
  • Sales Tax Permit: To collect and submit sales tax, you must register with your state's Department of Revenue. You may also be required to obtain a municipal business tax license.

You can connect with a leading law professional, who can understand your business needs and offer the right solutions accordingly.

Choose Right Location

Location—where it all is. The most crucial element for a salon business is this.

Is the location of the salon as crucial as it formerly was, though? You won't be as reliant on foot traffic if your salon has a significant social media following. Instead, your salon gains exposure and draws in customers online. 

The location of your salon is still crucial, though, even if you establish a strong internet presence.  Your location conveys a lot about you and it should be relevant to the type of salon and audience you are targeting.

And it should be easy for your target client to find you. Salons that are situated in areas where a lot of people drive or stroll by also need to spend less on marketing. Because of the location, they get that for free. 

However, choosing the ideal salon site involves considerations beyond client comfort and traffic patterns. It also covers additional relevant details like parking facilities, area type, rent or cost of site, and locality. So, never, ever skip or overlook this factor. 

Get the Best Equipment 

You've just taken up the keys to your new salon premises and signed the paperwork. 

One of the initial steps for a thriving salon business is to furnish your vacant space and procure the essential equipment needed to get started.

Amidst the enthusiasm of acquiring new items like furniture and decor, remember that each element comes with a substantial cost, urging considerable financial consideration. 

A significant amount of your initial spending will go toward salon equipment, and many owners tend to overpay. Make a basic inventory of the supplies your salon will need and ask from different suppliers to get the best price. Also, don’t compromise on quality at all. 

These are equipment necessities for any salon:

  • Salon workstations involve a chair, mirror, and product storage for hair and styling. 
  • Shampooing stations that include a chair, a shampoo bowl, and product storage. 
  • Drying stations featuring chairs, storage, and hooded hair dryers to be used throughout coloring services.
  • Coloring and chemical service stations, which include a color mixing station, tool trays, and storage for hair color and chemicals. 
  • Stations for pedicures and manicures Outfitted with chairs or tables for nail services. 
  • Reception area includes a front desk for appointments and client check-ins, a point-of-sale system, and comfortable seating for clients. 

Most salons feature one salon station for each employee, however, hair stylists with opposing work schedules may be able to share one. The amount of equipment needed is determined by the size of your salon as well as the number of employees you intend to hire. 

Hire & Retain Your Staff

Hiring your dream team is critical not just for the profitability of your salon, but also for the entire dynamic of the workplace. When employing new hairdressers, take your time and thoroughly screen them. 

  • Advertise Job Openings: Posting hiring ads on major beauty job boards and your social media accounts is a simple method to let your target market know you're hiring. You should also invite your social network to share your posts to expand your reach even further. 
  • Vet Stylists: Once you begin receiving interest in your open positions, take your time examining each possible employee. Examine their qualifications, prior experience, intended audience, etc. If everything goes well, you can schedule an interview. 
  • Conduct Interviews: These procedures let you learn more about your prospective employee and provide them a chance to highlight their qualifications. To gauge their level of expertise, ask them to do a test service on a model. 
  • Establish Payroll: You must be able to pay all your employees legally. There are numerous remuneration options available, such as hourly, commission-based, and annual salary. 
  • Train Them Well: After hiring & setting up payroll, you can properly train them to handle your salon management tasks, offer the best services, and offer only the best when it comes to customer support.

Get All the Required Business Insurance

Let's talk about protection: having insurance is mandated by law. Depending on the state, you may be required to carry different kinds of insurance.

  • You must first obtain worker's compensation insurance. Unexpectedly many injuries might arise from the salon industry. To handle unanticipated circumstances and injuries, worker's compensation insurance is necessary.
  • Insurance against professional and general liability is also required. To handle legal matters and lawsuits, general liability insurance is necessary. A lawsuit can be expensive even if it has no merit.  You will be protected if you have liability insurance, and if your hair stylists are renting booths, you should confirm that they do the same.
  • The next kind of insurance you'll require is commercial property insurance. Unfortunate events can occasionally occur on your property. Incidents that could affect your organization include thefts, mishaps that result in equipment damage, and recurring unplanned disasters. Property insurance will come in handy if something were to happen to your possessions.

If you need assistance with the process or are puzzled, get in touch with the top insurance provider or an expert. 

Marketing Your Salon

It's critical to build a marketing strategy before opening a salon that will increase brand recognition, attract new clients, and build a loyal customer base. To effectively market your salon business, you should employ a combination of both offline and online strategies to reach a broad audience and engage with potential clients. 

Here are various marketing ideas for your salon business:

  • Get a Professional Website: Craft an intuitive, aesthetically pleasing website spotlighting your salon, services, prices, and contact details.
  • Search Engine Optimization (SEO): Enhance your website for search engines to amplify its visibility in search results. Add pertinent keywords and phrases linked to your salon services.
  • Social Media Presence: Create and manage vibrant profiles on the right social media platforms such as Facebook, Instagram, and Pinterest. Share superior images of your work, interact with your audience, and publicize special offers to attract clients.
  • Email Marketing: Build an email list of clients and send out newsletters with promotions, salon updates, and beauty tips. Personalize emails to make them more engaging.
  • Online Advertising: Invest in paid online advertising through platforms like Google Ads or social media ads to target potential clients based on demographics and interests.
  • Third-Party Website Listings: Claim and optimize your salon's presence on local business directories like Google My Business, Yelp, and Bing Places. Encourage satisfied clients to leave positive reviews on these platforms. 
  • Content Marketing: Create and share informative and engaging content on your website, blog, YouTube, and even social media platforms. This could include beauty tips, tutorials, and trends in the industry.
  • Networking & Local Business Partnership: Attend local networking events and build relationships with other businesses in your community. You can even partner with them for mutual promotions. 
  • Print Advertising: Place ads in local newspapers, magazines, and community newsletters to target potential clients who prefer print media.
  • Salon Signage: Ensure your salon has attractive, well-maintained signage that is visible from the street, making it easy for passersby to identify your business.

Pro-Tip: Remember to track the effectiveness of each strategy and adjust your marketing plan as needed to maximize your results.

The Bottom Line

Phew. A long one. But, it is full of information and a comprehensive guide to starting a salon business. We just hope this article has covered what you need to know on how to open a salon business and even manage it in the best possible manner. 

FYI: the cost to operate a salon can range from $100,000 to $200,000. This figure will change based on several factors, including the size, location, and upgrades of your salon. 

We know, it’s a significant step to open your hair salon, but it can also be quite fulfilling. You must prepare yourself by conducting your research and creating checklists before making any significant financial decisions or investing any money.

When starting a salon, careful preparation, a well-defined budget, and an effective marketing approach can make all the difference.  The most crucial thing you can do is dedicate time and energy to maintaining your salon from the beginning.

And, for effective maintenance, get your hands on a best-in-class and feature-rich POS system. If you are looking for one, OVVI’s POS system has the relevant features to easily streamline the operations of your salon business. 

So, what are you waiting for? Connect with us & discuss right away!

Frequently Asked Questions(FAQs)

With a predicted growth rate of 7.55% throughout the forecast period, the size of the worldwide salon services market is expected to increase from its estimated value of USD 215.65 billion in 2022 to USD 383.88 billion by 2030. The salon sector in the United States contains over 80,000 locations with a combined annual sales of approximately USD 532 billion. 

However, the revenue earned by a salon business might vary depending on a variety of criteria such as location, size, services supplied, and customer base. 

An average salon turns a profit of $19,100 annually. The average profit margin for salons is 8.2%, which is higher than the 7.7% average for all businesses and is rising yearly. The profit margin of a salon might vary from 2% to 17%, contingent upon the level of management attained.

The primary source of income for hair salons is service revenue. In the US, this makes up approximately 92% of the revenue made by the average hair salon.  Additionally, retail sales account for a meager 8% of total revenue.

This is an average image. The most prosperous salons have found that adding this service to their core service offering is profitable, thus they usually have a larger share of retail sales—14–18%.

Starting a small salon business at home presents an amazing opportunity with higher revenues and reduced overhead expenses. Embarking on this venture demands meticulous attention, professionalism, and a steadfast dedication to delivering top-notch services.

Here's a streamlined guide to start your small salon business:

  • Establish a Dedicated Space: Devote a specific area in your home for the salon, be it a spare room or a well-ventilated space with ample light. Ensure it provides comfort and safety for both you and your clients.
  • Legal and Regulatory Considerations: Research and understand any zoning, licensing, or permit requirements for operating a salon from home in your area. Obtain necessary licenses and permits: If required, get the appropriate licenses and permits, such as a cosmetology or beauty practitioner's license.
  • Equipment and Supplies: Invest in essential salon equipment and supplies, which may include a styling chair, mirror, tools, and products. Maintain a clean and organized workspace with proper storage for your equipment and supplies.
  • Determine the Services and Pricing: Decide on the salon services you'll offer. This could be haircuts, hair styling, nails, facials, or any other beauty services. Set competitive pricing for your services, considering your skills, location, and the local market.
  • Marketing and Promotion: Spread the word about your home salon through verbal referrals, social media, and local advertising. Establish an online presence with a basic website or social media profile to display your work and contact details. Allocate resources for offline marketing too. 
  • Continued Education: Stay updated with the latest trends and techniques in your field by attending workshops, taking online courses, or reading industry publications to provide the best-in-class services to your clients.

Note: Make sure to provide excellent customer service, build a loyal client base and increase the retaining of customers. Satisfied clients are more likely to refer friends and family to your home salon.

After your salon opens and you have your first 30 to 40 clients, you should push yourself to the limit to maintain momentum and grow your business. Opting for the best point-of-sale (POS) system is a judicious decision for optimizing your business. However, various POS systems exist to help in efficiently handling daily tasks and managing your salon operations.

  • Start Scheduling Appointments Online: The POS system helps you manage online appointments as it saves you time and resources by eliminating the need to answer and return calls, but all of your clients will want it as well. They want complete control over the services and personnel they choose, and the ability to schedule appointments whenever it's convenient for them.
  • Uphold the Client Database: It contains their contact details, like name, phone number, email address, and so forth. If they are a returning customer, respect their preferences for services and personnel. 
  • Maintain an Active Email Account: To keep your clients interested in your business, periodically send them both promotional and non-promotional material. You can submit things that might lead to recommendations and positive reviews for you. 
  • Streamline Your Online Payment Procedures: Maximize your use of paperless transactions and record all online payments made using Square, PayPal, Stripe, and other platforms.

Note: Make sure to choose the right and feature-rich POS system for your salon business.

Obtaining a cosmetology license and making sure it is clearly visible in your shop for customers and inspectors should be your priority as a prospective salon owner. Training can take several months. 

While attending beauty school might be costly as well, there are alternative ways to obtain your license. To gain experience and gain the knowledge required for an exam, some individuals aspiring to become cosmetologists may choose to work as apprentices at another establishment. 

Obtaining a license in cosmetology and salons can be costly. It can sometimes cost around $12,000. If you're just starting, you should concentrate on earning your license rather than trying to open a salon.

Salon businesses are among the most competitive and saturated businesses. So many salon businesses fail because of the following reasons: 

  • Inadequate Funds on Hand: When starting a salon, you must have cash on hand to cover unforeseen expenses and fees. Without the same, it is quite difficult to sustain.
  • Lack of Experience in the Field: Forecasting future growth and managing day-to-day operations can be difficult if you lack industry experience. Many of the most successful salon owners have long careers in the business.
  • Inability to Follow Trends: Salon trends shift often, so continuing with your current approach may cause your business to decline. Encourage your employees to pursue more education, pick up new skills, and broaden their scope of work.
  • Inability to Schedule Appointments: Salon operators who struggle to handle walk-in and repeat business sometimes struggle to stay in business. 
  • Competition: Due to the saturation in the industry, competition is one of the biggest challenges faced by salon owners and a major factor in the failure of salon enterprises. 
  • Customer Services: In the salon business, having poor and unbalanced customer service is the major reason why most businesses fail. 

But, don’t freak out. Being a salon owner is a lucrative business that draws in a lot of entrepreneurs. But make sure to plan well, forecast your future well, and cope with the trends to maintain a competitive edge in terms of pricing, services, and general customer care.