Opening a salon is exciting, especially if you are passionate about the industry. Unfortunately, many people wanting to venture into the sector struggle to plan and budget correctly when planning for their new business. Like any other business, you must research before you begin. In this article, we will tackle this big question, ‘how much does it cost to start a salon business?’ Notably, the costs differ depending on the type of salon you want to open and the location. The following guide will help you estimate how much you should have before you start and what you need to start on the right foot. If you properly plan, manage your budget, and market your business, you can earn a hefty return from your salon investment.
Factors that Affect the Startup Cost of a Salon Business
Renting vs. Owning a Salon
The decision to rent or own a salon dramatically affects the overall cost of opening a salon. Buying your salon building at once can be expensive, even with a mortgage; hence, you can start renting if you don’t have enough to buy. Remember, the price of purchasing a building plus rent is determined by location. Hence, do your research and see the different rent prices in the regions you have in mind. Look for a place your target audience can easily access to ensure your business is busy. However, remeber that rent can also quickly add up, hence have a plan of owning your place. You can negotiate a deal to own a salon, make a downpayment, and have agreements on monthly charges. It all depends on your plan. Like every other business, you need a salon business plan to act as a roadmap to where you want to head as a business owner. For instance, in your project, you can rent for a specific number of years as you save to own your place. That is why it is crucial to always have a business plan before starting to have direction. Here is a sample of our salon business plan to guide you with a plan before you go to the cost breakdown of opening a salon.
Type of Salon You Want to Open
Do you want to open an all-in-one salon where you offer both hair and nail services, a spa, or a sauna? Remember, each comes with its different expenses. To add up, before you decide on the type of salon and location, consider your clientele, marketing strategy, and brand image. Once you think through, you might find your niche and location and focus on building your brand without confusing what you major in. Here are the most crucial things to consider when selecting a place for your business
- Average cost of rent – You need to consider the cost of rent, utilities, and taxes. Remeber, as much as you love making people look good and feel good, you need to make profits. Hence, consult an experienced commercial agent to help make the right decision and ensure you don’t overlook unforeseen expenses.
- Demographics: Does the location have the majority of your target audience? What are their patterns and interests? Learn all you can about the population, mainly your target.
- Other factors include:- Safety, accessibility of business resources, stability of the local economy, competitors, transportation and parking, the neighborhood’s aesthetics, the building’s condition, the building’s size, and any restrictions from the owner.
Remember that a good location will help you increase sales. Hence, take your time before you choose a place.
Buying an Existing Salon
If you find opening a salon from scratch to be a lot of work, plus resources, look for someone interested in selling their salon. Buying a salon can make the job easier, especially in a well-established neighborhood. You will save on some costs, and you won’t have to start from starch when it comes to marketing. Buying an existing salon can cost roughly $62,000, depending on the location and your seller’s investment. In such a scenario, consult a lawyer to help you with the negotiations and transfer certificates.
You’ll save on some of the costs for buildout because the business already has some of those elements in place. However, you’ll still need a budget to rebrand the salon and establish a new business.
Estimated Cost Breakdown for Starting a Salon
Notably, starting a salon business may cost you $ 90,000 to $ 150,000 based on different factors that we shall discuss in depth below:-
1. Salon Insurance
It is crucial to insure your business. You need to decide which insurance cover to pick. Luckily, we have full salon insurance for salons, which costs almost $ 2,900 annually, including two employees. However, this cost varies depending on the insurance company you pick, the number of employees, business turnover, and the state. The insurance cost can range from $ 50 to $ 1000 monthly. Hence, consult an expert to know which cover best suits your salon business.
2. Business Licenses and Permits
To run your salon business, you must have a license and permit from the local government. In this case, a salon business license cost roughly $ 50 and $ 1500. It entirely depends on your local government. Remember, the type of permit you need depends on your location. Ensure you check with the local authorities and pay for the required visas to avoid getting sued.
3. Salon Equipment
For salon operations to succeed, you must invest in the right equipment. From furniture, mirrors, and lighting at the salon to other equipment like hair dryers, shampoo bowls, blow dry, skins, curling irons, flat irons, clippers, scissors, to hair products. To help get an accurate budget, you need to list what your salon will need and check out the prices of each item here on Amazon. All this equipment might cost $ 5,000 25 000depending on the brands and the things you need. Also, Opening an Amazon business account is advisable if you purchase most of your products from the site.
4. Marketing
If you are opening a new salon, it is your work to ensure you attract new customers. If you already have clients, you also must ensure that you retain them. Both instances need a marketing plan. You need to budget for advertising to create awareness. It may be through social media marketing, email marketing, a website to showcase your services or flyers, among other marketing techniques. You may offer incentives or have referral bonuses, discounts, or giveaways to retain clients. How much money you need to set aside for your marketing needs is totally up to you. We have many cost-effective ways if you are ready for digital marketing. However, all these activities could cost you $ 500 upto $ 5000 depending on how far you want to go.
5. Employee Needs
You will need to hire professionals to help you with clientele. Regarding staffing, you must decide on the number of employees and monthly payments. Set aside some money purposely for salaries. Remember, it is a recurring expense.
6. Utilities
A salon needs electricity, water, and gas for heating or cooling. Hence, also set some money aside to carter for these utilities. Your location will determine the price; ask your commercial agent to help you get a rough estimate before picking a building.
7. Salon Software
You will need a reliable point-of-sale system to help with transactions, scheduling, team management, reporting, inventory management, and other tasks. This softwares automates processes, making the operations fast and more accessible.
8. Legal or Consulting Fees
Hiring a professional to help you make the right business decisions is advisable. In this case, you could spend $ 1,000 on consultation fees.
9. Other Startup Costs
When starting a business, you need to set money aside in case of additional fees like shipping expenses, incorporation fees, professional consulting fees, and others. Make sure you have a list of everything needed before you start.
Conclusion
Lastly, if you haven’t worked in a salon before, gaining some experience and learning the ins and outs of running the business before you begin is advisable. You ask an existing business to hire you for a while and take it as a learning experience. We hope we have given you a glimpse of how much it costs to open a salon. Although the process may be demanding, if you have a passion for beauty, you can be a successful salon owner if you take the time to plan and have a proper budget.
