How to start a salon business in 17 steps
2020 was a rough year for beauty salons. However, trends suggest that our post-pandemic world will include a resurgence in beauty salon popularity. If you want to open your own salon business, now is the time.
In this article, we’ll go step-by-step through what you need to do to open your own salon. But first, let’s talk about licensing for salon owners.
Can I start a beauty salon if I’m not licensed?
It’s a common misconception that you need to be a licensed hairstylist, esthetician, nail technician, or other beauty professional to own your own salon. You can attain your stylist’s license, but it’s not a requirement. As long as you have good business sense, hire the right stylists and technicians, and invest in education for your team, you can become the top salon to visit in your area.
Whether or not you have your hairstylist’s license, make sure you ask yourself some essential entrepreneurial questions to ensure you’re really ready to open your own salon. Then, familiarize yourself with the steps we’ve outlined in this guide and go for it!
1) Write a salon business plan
Your salon business plan is a roadmap for your business. It is important to have it at the start of your journey for two main reasons:
- It will help you secure funding from banks and investors
- It will help you clarify your own vision and stay on track as you continue to build your business
A great salon business plan has a few key components:
- Executive Summary: What is the purpose of the business? What are your main goals with the business? Why does this business need to exist? What is your mission statement?
- Overview: How will this business be structured? How will you position this business to be successful in your area?
- Industry Analysis: What market research have you done? What are the insights you’ve gleaned? What does the research tell you about the salon industry in your area? Include market size, trends, gaps, and level of opportunity.
- Competitive Analysis: Talk about your competitors, their strengths, weaknesses, and position in the market. How will you differentiate yourself from them? What do you offer that they don’t?
- Marketing Plan: Who is your ideal client, and how will you reach them with your marketing strategy? What marketing channels will you use? This is a good place to discuss your brand as well.
- Management: Who are you as a salon owner? What do you bring to the business that will ensure its success? How do you intend to manage the business?
- Operations Plan: Outline the day-to-day operations of the business, any systems you intend to use, and the number and type of employees you intend to hire.
- Financial Plan: How will this business make money? Define your financial goals and projections for the business for each of its first five years. Detail the startup costs, estimate regular expenses, and discuss how you intend to fund the business.
2) Choose your business structure
There are four main types of business structures you can choose for your salon business. These are sole proprietorship, limited liability company (LLC), partnership, and corporation.
Note that unless you intend to operate as a solo beauty professional, you will likely want to select an LLC, partnership, or corporation as your business structure rather than a sole proprietorship.
3) Choose your niche
A niche can help you stand out in your community. If your market research shows that your area is particularly saturated with a certain kind of salon, differentiate yourself by selecting an underrepresented specialty as the foundation of your salon. This can be a specific sort of service or simply a focus—something for which you can come to be known as the expert.
Some ideas of a salon niche are:
- Color-only (a color bar)
- A classic barbershop
- Fancy, complex nail treatments
- A focus on Black hair
- A focus on curly hair
- Styling bar (no cuts or color—only blowouts and styling)
- Children’s salon
- A focus on bridal and special occasion hair
4) Identify your unique value proposition
Your unique value proposition (UVP) is different from your niche in that it identifies your overall brand, not just its specialty or services. It's not just what you offer; it's how you offer it.
Some ideas of a UVP for a salon are:
- Free blow-outs or styling—every time
- Entirely eco-friendly, sustainable products and services
- Internationally trained staff
- A powerhouse team of stylists with different specialties (curly hair, extra long hair, gray hair, etc.)
- Easy appointment scheduling
- Regular community events
Remember to highlight your UVP as part of your marketing strategy. Feature it on your website, talk about it on social media, and ensure that you consistently deliver on your UVP. This will help you to build your brand over time.
5) Select your business name
Your business name should follow a few simple guidelines:
- It should be easy to remember
- It should be simple and pronounceable
- It should describe what sort of business you are
- It should be in line with your brand
- The matching domain and social handles should be available
Use a business name generator to help you brainstorm ideas.
6) Determine your target clients
Though you will likely serve a large demographic, you should know that one ideal client you’d love to serve daily. Ask yourself questions about your dream client like:
- What do they do for a living?
- How do they like to dress, do their makeup, and, of course, wear their hair?
- What is their annual income?
- Are they married?
- Do they have children?
- Where do they love to spend their time?
- What social media platforms do they use?
Use your market research and analysis to help you discover your target audience and design your marketing to resonate with them. This will also help you to choose your services and define your brand.
7) Define your brand
Speaking of defining your brand, this is a very important step when starting a beauty salon, as it will shape how your potential clients think of and talk about you. The following are parts of a strong brand:
- Your salon’s color palette and design aesthetic
- Your salon’s niche
- Your salon’s UVP
- Your values
- Your mission statement
- Your team
- Your products
- Your target demographic
You’ll learn more about your brand as you grow, but your initial business plan should help you clarify which direction your brand needs to go.
8) Create your service menu
Your salon’s service menu will include:
- Your core services
- Your add-ons
- Your pricing
All three are important when designing your services. Your core offerings are services like haircuts and all-over color. Your add-ons are options like deep conditioning treatments and more specialty color services like balayage. The pricing you choose needs to be consistent with your financial plan. Refer to your beauty salon business plan to ensure your pricing is in line with your business goals.
Tailor your menu toward your ideal client. Refrain from designing an overly complicated or jam-packed menu. You can always add additional services over time. Use your business plan as a reference to determine which services will likely do well for you in your new salon.
9) Decide on products to sell
Along with your salon services, you will need to provide a line or two of products for sale. Ensure that the lines you choose fit with your brand. If you are an environmentally-friendly salon, for example, you want to stay away from product lines full of harsh chemicals.
You should also consider price points for the products. Offer two levels of product—a standard and a luxury line—if that serves your target market. You can also supply your customers with products geared toward different hair types.
Whatever product lines you choose, ensure that they do not compete with each other and that your target market informs your selection.
10) Find a great location
Unless you plan to operate your salon out of your home, you will need to secure a brick-and-mortar location. To find a great location for your business, consider:
- Where your ideal clients like to spend their time
- The location’s relationship to your competitors
- The cost
Work with a real estate agent or property management company to help you find the right fit for your business goals. Remember to consult your business plan to ensure that the location you want to lease will support the financial growth of your business. You may find that a slightly more expensive location in the perfect location is the better option for you than a cheaper space in an area too far from where your target clients spend their time.
11) Get your equipment and supplies
It takes several pieces of equipment and supplies to open your own salon. At the least, you will need:
- Salon chairs
- Washing stations
- Hood dryers
- Laundry machines
- Styling stations
- Hand-held blow dryers
- Flat irons
- Styling products
- Shampoo, conditioner, and other hair care products
- Cleaning products
- Point of sale (POS) software
- Accounting software
- A computer or tablet for the front desk
- Various display cases
- Furniture and decor for the lobby/front waiting area
The equipment costs can add up—especially when you invest in high-quality pieces. You can expect to spend upwards of $50,000 to open your salon—and that’s if there are no major design projects to take on in the space you lease.
If you have to renovate your space, you could be looking at well over six figures to open your salon. This will likely require an up-front investment, which we will talk about in the next step.
There are two major financial questions nearly every salon owner is bound to have when thinking of starting their own salon. Let’s unpack both.
How can I finance my new salon?
There are several ways to secure financing for your new salon. Some of these include:
- Bank business loans
- Private investors or lenders
- Friends and family
- Your own savings
You may need a combination of several options to start your business. Remember that a strong business plan will help you to secure funding from banks and investors.
How much can I make as a salon owner?
Salons generally maintain a higher profit margin than the national average in any industry. Salon owners can even double that percentage with careful management. The exact dollar amount varies, but the standard profit margin for salons is close to $20,000.
As a salon owner, you will need a suite of small business insurance policies to ensure that you are covered and free to run your business. The exact policies you need will vary slightly depending on if you are:
- A hairstylist
- A barber
- A cosmetologist
- An esthetician or beautician
- A nail salon technician
- A spa business
Generally speaking, however, you will likely need the following forms of insurance to open your business:
- Workers' Compensation: Workers’ compensation coverage protects you if one of your employees becomes ill or injured while on the job. To receive a quick estimate of your workers’ comp premium, try our 60-second workers' compensation calculator.
- General Liability Insurance: A single lawsuit can destroy your business. If you are sued for injury or property damage, this insurance will help protect you.
- Business Property Insurance: This form of insurance covers your salon equipment.
- Business Interruption: If you must suspend operation for any reason, business interruption insurance will help supplement the lost income.
- Business Owner's Policy: A Business Owner’s Policy bundles multiple policies together. Your Business Owner’s Policy may include general liability, business property insurance, and business interruption coverage all in one package.
(Want to know how much you’re likely to spend on small business insurance? Get a fast and free quote for your salon from Huckleberry.)
14) Paperwork, licenses, and permits
Here are the main pieces of paperwork to cover before you can announce that glorious salon grand opening.
- Register your business name: Check with the Small Business Association for instructions on registering your business name.
- Get your EIN: Your EIN is your Employer Identification Number, which acts as a Social Security Number (SSN) for your business. You receive multiple benefits from your EIN, so secure one right away.
- Get your business license: Every state has a different process to secure your business license. Find your state’s specific regulations and follow them to ensure your business is registered properly.
- Get your State Cosmetology or Beautician’s License: All your stylists and technicians will need to be licensed. You do not need to be licensed unless you also intend to work as a stylist in your own salon.
- Get your Salon Retail Seller Permit: This allows you to sell products in addition to services
- Get a Certificate of Occupancy: This allows you to operate your brick and mortar location
- Open a business credit card and business bank account: You will want to open your own business bank account and business credit card when you open your salon. This will keep your personal and professional finances separate and the IRS happy.
Your employees are a crucial part of your business. From stylists to estheticians, nail technicians to front desk associates, your team will determine the success or failure of your business.
Decide what sort of employees your business can support. Are you a master stylist who can afford to take on stylists straight out of beauty school? Or, do you need to hire a team of highly-seasoned veteran beauty professionals to support your business goals?
You may also want to acquire the help of an accountant or bookkeeper to help you with things like your cash flow statement and balance sheet. This will require an additional investment from you but can help your salon achieve long-term financial health.
16) Develop your marketing strategy
Every new salon owner needs a solid marketing strategy to ensure the word gets out about their business. If you feel overwhelmed by the prospect of a full-blown marketing strategy, start small! It’s better to have one solid channel through which you consistently reach your clients than several channels you can’t keep up with.
Here are some options for you to think about as you develop your marketing strategy:
Your salon’s website will be an essential part of your business. It can allow potential clients to see your list of services, read about your story, and—very importantly—book appointments online. It should be simple, on-brand, and designed with your target audience in mind.
If you’re a whiz with web development, go ahead and build your website yourself. However, if you think you’ll have to spend hours researching how to build a website on YouTube, think about hiring a professional.
You can also include a blog on your website to generate more organic reach through your posts. Remember that search engine optimization (SEO) will increase your likelihood of showing up on the first page of Google. Hire an SEO expert to set you up for success in your local area.
Email marketing will help you gain trust and brand recognition with your potential clients. You can offer a sign-up form on your website and in person at your salon. Once you start to build your list, send out regular email updates about events and promotions in your salon. This is also a great place to offer some helpful hair/beauty education to your subscribers.
While a flyer sent to a resident’s mailbox might end up right in the trash, you can build up name recognition by leaving posters, business cards, and brochures in other local businesses. Plus, this is a great way to get to know other business owners in your area. (Hint: they can become your clients, too!)
Social Media Marketing
When done right, social media marketing can launch your salon business, but it can also be overwhelming. Start with one platform and learn it well. Once you’re proficient at it (or have a staff member who is), you can launch on another platform.
Consider the following main social media platforms as part of your marketing strategy:
Google My Business is free to set up and helps you get found on Google local search. All you have to do is register your business name and create a profile—then you're all set!
Word-of-mouth and referrals
The best way to drum up word-of-mouth business is to do outstanding work. When someone has a great day at the salon, they talk about it. However, you can help make sure your salon’s name comes up in conversation by offering a referral program. Offer both the referrer and referee some sort of perk. This can be as simple as a free add-on or a 10% discount on their first or next service. A little bit goes a long way here.
17) Additional resources
Whew! You did it. Now that you know what it takes to open your own salon business, you’re free to go forth and make it happen. Just remember to stay cool as you do.
Continued education is an important part of growing a beauty salon. Here are some additional hair and beauty industry resources for you to bookmark:
- 4C Hair Chicks: A killer YouTube channel devoted to Black hair maintenance and styling
- Confessions of a Hair Stylist: Another great YouTube channel. This one is all about trends in hair styling. Great for those who want to include special occasion hair as part of their service menu
- Lockhart Meyer Salon Marketing: A blog and website for salon owners who want to grow their business through targeted marketing strategies
Cross “get salon insurance” off your to-do list today with Huckleberry small business insurance
At Huckleberry, our mission is to help you get quality salon business insurance faster than it takes to blow-dry those gorgeous locks of yours. Grab a quick workers’ comp quote or see how you can get insured online in minutes.