A common question that I often hear is “How much does it cost to open a salon?” Many salon owners struggle to cope up with the right amount when planning their new business. The truth is that there’s not a single answer to this question. Like any business, you’ll need to do a bit of homework to figure out your startup costs. Don’t worry- we can help.
The cost of opening a salon varies depending on your business plan and goals. How much does it cost to open a small salon? Less than a large one. How much does it cost to open a salon suite? Less than a small salon. Are you getting the idea? Okay. Let’s take a closer look.
Do you plan to set up a high-end beauty salon and spa with the latest equipment, or is the salon you want a smaller-scale, local hair salon? The type of salon and your business plan will impact your average cost when planning your startup expenses. Additional things to consider are staffing, your salons physical location and your advertising/ marketing plan in those crucial first few weeks. All of these will help you to grow your business. They’ll also help you to build a solid budget and get an idea of the cost to start.
What You Will Learn
In this article, we’ll look at the basic costs to open a salon, as well as how those costs can change, based on your business needs.
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- How Much Does It Cost to Open a Salon?
- Things to Consider Before Planning your New Salon
- The Investment: One-off Costs of Opening a Salon
- The Operating Costs of Running a Salon
How Much Does It Cost to Open a Salon?
First of all, you’ll need to decide whether you want to buy an existing salon and make it your own, or build your own hair/ beauty salon from the ground up. If you’ve decided to purchase an existing salon, you should plan to spend somewhere between $40,000 and $250,000. So, you’ll need to have some money set aside for this.
If, however, you want to build your own salon, this amount can increase to anywhere between $100,000 and $500,000 depending on your business plan and requirements.
For those of us who want to open a salon on a limited budget, buying an existing salon can be a great way to get into business quickly. Although the salon will probably come with equipment, supplies and staff (you may not need to hire anyone new), you’ll likely want to make a few changes in order to make it your own. These will inevitably add to the cost- you may want to do an updated salon fit-out, rebrand with new marketing, change the decor or just lease some new equipment if things look a bit dated. Remodelling can cost at least $32,000 on average.
Remember that the price of the salon will depend a lot on the location, what condition the property is in, and the equipment that comes with it. Before committing to a location, it’s a good idea to do some research and make sure that you’re buying a business that’s actually profitable.
What about starting a salon from scratch? This will almost certainly cost more. Business owners will need to consider everything from the salon location, decor, the expense of buying or leasing new salon equipment, staffing needs, as well as any local permits, insurance or zoning for your new business space.
Things to Consider Before Planning Your New Salon
Would you Like to Rent or Own a Salon?
When it comes to salon expenses, this is a big one. While it can be quite expensive to buy your own salon building outright, even with a mortgage (again this varies a lot, depending on location and business size), rent can add up quickly over time, too.
Do your homework and see what the average rent prices are for businesses in your area. Make sure to set aside a downpayment if you’re looking to own a salon. Either way, always factor mortgage or rent into your expense budget per month.
What Type of Salon Would You Like to Open?
Do you want to create a trendy, state-to-the-art hair salon in the busiest neighborhood, or a cozy, small town establishment? This will impact your costs.
Before you pull the trigger on any salon location, think carefully about your clientele, brand image and marketing strategy. You may find that a less-expensive option is actually a better fit for your small business.
Do You Already Have a Client Base?
If you do, you’ll want to make sure that you can keep them happy at your new hair salon. If you don’t, then you’d better have a marketing plan ready to get some clients as soon as possible.
Depending on how much time you want to invest in marketing your salon services, you can expect to pay anything from nearly free (using free online templates for a salon website, posting on social media and using email marketing), to the higher cost of investing in professional marketing services for over $4000 on average.
It’s really up to you.
Do You Want to Build Your Own Salon, Join a Salon Franchise or Buy an Existing Salon?
Again, this is a matter of personal preference. While it can be expensive (the price of joining a salon franchise in the U.S. can vary from as little as $82,000 to over $1,000,000), joining a hair salon franchise comes with a lot of benefits.
It can help you maximize your client base by linking your salons business with a pre-existing, trusted brand, provide you with a business plan and vision to start with, as well as ongoing support for your salon location and training materials for staff.
On the other hand, buying an existing salon business lets you do your own thing without the hassle of corporate oversight, and building your own hair salon from scratch gives you maximum creative autonomy.
This means that you can determine your decor, layout, equipment, staffing, and customize the services that you’ll offer.
What Budget Are You Considering for Opening Your Salon?
It doesn’t matter exactly what your budget is- what matters is that you have one put together. Take a look at the average startup cost for each of these options, then factor in the additional expenses to get your small business up and running (you’ll need to think about supplies, salon software, taxes, insurance, wages, etc.).
The Investment: One-off Costs of Opening a Salon
In any industry, you’ll have to divide your business costs into two basic categories: One-off expenses and recurring ones.
Many hair salon startup costs will fall into the first category. Of course, the amount of money that you’ll need to spend on things like new equipment, furniture, legal fees or a salon fit-out will be much greater than your average monthly salon expenses.
This is why every new salon owner needs to have a business plan and budget, ahead of time.
To start, think about “needs” versus “wants”, especially if you’re financing this startup using credit or a loan.
There are some things that you’ll find you cannot do without (such as licenses and legal help), some things that will attract new clients (think good advertising, equipment and a nice decor), and then some items that you may want to save to purchase later on (do you really need that vintage leather couch for your waiting area?).
Certificate (if required)
If you’re working in the U.S., the laws and costs will vary by state. The same is true for most countries. Make sure that all of your stylists (and yourself, if you’ll be helping out) have a valid cosmetology license for the state or province you’re working in.
Your stylists or beauty professionals will also need a license for any specialty services that they provide, such as nail care, waxing, etc.). Not only is this the law, but insurance requires it, too.
Salon Rent Deposit
This will include the cost of your monthly rent, along with any other related costs, which can vary depending on factors such as location or what is included with the hair salon rental costs (for example, in California a landlord can legally charge three times the cost of a month’s rent upfront on a furnished property).
Even if you do most of your own paperwork, expect to see some legal fees.
These may include consulting a lawyer to help you purchase a property, having someone go over the “fine print” of your salons new lease agreement, or researching the business permits and each business license that you’ll need. You may have to pay about $200 per hour for this.
New Equipment Purchase
This can be a major expense in the beauty industry, but also a fun one. Although a full new set of hair salon equipment could cost in the neighborhood of $27,000, these initial costs can vary depending on your needs and the services you’ll offer to clients.
While it can be tempting to save money by buying or keeping older equipment, remember that it’s also more likely to need regular maintenance, and may not attract clients as easily if it looks dated. If you choose to invest in brand new equipment, you may not have to pay the entire cost upfront.
Many companies in the beauty industry offer credit or leasing options.
Washbasins and Chairs
At its most basic level, any hair salon will need these. The costs of a salon chair setup vary, but you can expect to pay anywhere from $200 to more than $1000 for a high-end one. As for washbasins, a good strategy is to have about one backwash for every three chairs. This way, you won’t risk long wait times or have wasted space. An inexpensive basin setup only costs a few hundred dollars, but don’t forget the related costs of plumbing and installation.
Depending on your plans for your hair salon business, you may want to go with a full salon fit-out.
Salon owners often choose this option when they want to customize their small business and create a totally new or fresh look. How much money your hair salon fit-out will cost depends heavily on the square-footage of your salon, which service (if any) you use to help with decorating, etc., and exactly what needs to be done to the space.
This includes your salon’s logo, along with your business information. Do you already have a hair salon logo, or will you be designing one? If you hire a professional graphic designer it will increase the cost, but also help you achieve a professional-looking result.
A sign like this can cost several hundred dollars, whereas you can get one much cheaper if you shop carefully. Check local advertisements and websites for any promotions.
A good hair salon website is necessary to advertise your business, especially when you’re first opening a salon. This way, potential clients can subscribe and you can secure those all-important first appointments. You can make one yourself (or with your staff) using free online templates, or you can hire a professional to help.
This might cost anywhere from $300 to $700 to create the basic site.
The Initial Stock
Your new hair salon will need enough retail and professional products to make your initial monthly sales targets and offer great service to your new clients. Make sure to have enough inventory on-hand for your monthly needs, reordering only when you reach a certain point (salon software can help you track inventory levels and place these orders).
Although your total supplies could cost as much as $20,000 (if you need things like perm rods, nail polish and chemicals for styling, too), how much money you need to spend on inventory supplies and retail stock will really depend on your salon size and what you think your clients will need.
All hair salons need to think about this, no matter how large the business is or how many employees they have. It’s no different for a small business. Sometimes, the unexpected just happens. Try to keep at least $500 in cash set aside “just in case”.
The Operating Costs of Running a Salon
When you’re opening your new salon, it can be easy to get caught up in the bigger costs needed to get things up and running. That said, don’t forget that every successful salon will have expenses associated with regular operations, too.
Let’s take a closer look at some of the monthly (or yearly) costs that you can expect to see as a salon owner. This way, you’ll be able to plan your budget and tackle any expenses head-on.
Monthly salaries and wages for employees are often one of the highest salon business-related costs. The average skilled stylist makes nearly $30,000 yearly in the U.S. Add the costs of receptionists, cleaners, and any other staff to your budget.
You’ll need to set aside money each month for taxes. These taxes often need to be paid every quarter, so you’ll want to keep track.
The amount varies for different small businesses, so make sure to consult with your employees and an accountant.
How much you’ll need to budget for rent (or your mortgage) will depend a lot on your hair salon’s location, as well as the size and amenities available in your space.
Salons can be successful in many sizes and neighborhoods, so make sure to do some research before opening your business- you might be able to find a great property with a solid client base in an unexpected spot.
Licenses and Permissions
Business license costs are not always a one-off event. Salons often change or update services, hire a new employee or decide to send existing staff for training. This means applying for or renewing existing permits and licenses. Renewal fees vary by region, but you can easily find them on your state or licensing board’s website.
Offering your stylists professional development opportunities and training is a great way to update your salon’s services and retain employees. Salons that challenge their staff and encourage them to hone their skills are more likely to do well.
Make sure that you work with each employee to determine their career goals, research these opportunities carefully, and think of them as an investment.
Salon Software and POS System
This software will help you to set appointments, track bookings, monitor inventory and supplies, track staff performance per month and much more. A point of sale system will make it easy to track and process transactions, saving you time and money.
The cost of these systems vary depending on your salon’s needs, but you should include the cost of any computers, printers, tablets or sales hardware in your calculations. This can range anywhere from $500 to over $2000.
Some lease agreements might include utilities, but in most cases, you’ll have to cover the cost of your own water, electricity, heat and internet.
On average, an electricity bill for a salon can cost about $150 per month, and water is likely to cost between about $45 to over $150 for the larger salons.
The cost of utilities could be more or less, depending on your region’s policies.
If all goes will, you’ll need to reorder your salon retail and professional products inventory regularly. Try to avoid over-ordering in order to save cash, space and avoid waste.
You’ll need to figure out what your average sales and use are each month, and place orders before things get too low. Salon software can help a lot with this.
Having insurance is one of the most important hair salon requirements for opening and running your business. On average, expect to spend somewhere between $300 and $700 per year for insurance.
If you offer additional cosmetic services, or invest in a health insurance plan for your employees, this could increase further.
Financing for a Salon
Some people wonder how to open a salon with no money. While that’s not strictly possible, it is possible to finance most of the cost. If you took out a loan or any financing to cover the cost to start your business, you’ll need to include the monthly payments in your overall budget.
Late payments can cost you a lot of interest and damage your credit rating, so make sure to take care of your financing on time.
Salon Equipment Leasing
Good equipment is one of the requirements to open a salon. In fact, up-to-date facilities (as well as hiring great staff with excellent customer service skills) can be one of your best forms of advertising- word will get around. If you decide to lease equipment, your monthly payment will be based on the terms of your agreement and how much equipment you need.
Bank and Credit Card Processing Fees
Can vary from about 1.5% to 2.7% on average, but some companies might charge a higher or lower rate. Do your homework before signing up for a specific service and make sure that you’re paying the best possible price.
You can expect to pay these for using different online platforms to promote or sell your services, or for making certain transactions (for example, if you sell your salon’s products on a separate website). Shop around and be aware of these, so that you don’t get any surprises.
This can be done very cheaply or be very expensive, depending on your plan. Social media, email marketing and your salon website are all inexpensive ways to promote your business. Large, professional advertising campaigns can cost over $4,000.
Maintenance and Repairs
Some maintenance may be covered by your rental agreement or your equipment lease, but you will probably have to pay out of pocket for other repairs. Set aside about $500 each month for this.
This will cover any emergencies or shortfalls that you encounter. It’s better to be prepared and have a little extra money in your monthly budget. A good rule is to plan for an extra $500, but you may want to set aside more for a larger salon.
If you don’t do your own bookkeeping, you’ll need an accountant. Even if you do, it’s a good “insurance policy” to hire one to look everything over before filing your taxes. In the U.S., chartered accountants typically charge anywhere from $140 to over $400, depending on what services you need.
Every area has different requirements to open a hair salon, and these will impact the cost. Because of this, it’s important to learn as much as you can beforehand, and have your “opening a salon checklist” made and ready to go.
So, how much does it cost to open a salon? It depends on the salon. A larger salon in an urban location will cost more than a small, neighborhood one. Ask yourself what kind of salon you want to open, and this will help you to set the perfect budget.
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