Skip to main content

Have you ever thought about starting your beauty salon? The beauty industry is a multi-billion-dollar industry. According to the Professional Beauty Association, an estimated 1.2 million beauty salons exist in the USA. The beauty salon industry in the USA generated $57.6 billion in revenue, and it is expected to continue to grow, with a projected revenue of $63.2 billion in 2024, according to IBISWorld. In the last few years, beauty salons have become more popular. Not only does a salon help customers improve their appearance, but they have become an established social institution. Now is a great time to consider starting your beauty salon.

beauty salon open for business

Image by Michelle Raponi from Pixabay

10 Steps to Starting Your Own Beauty Salon

Have you always been passionate about hair and beauty and dreamt of opening your own salon? Starting a beauty salon can be an exciting and rewarding business venture but it requires careful planning and execution. Here are 10 steps to help you get started on the path to owning your own beauty salon.

Imagine you’re a hair stylist with a loyal following of clients, and you’ve decided it’s time to open your own salon. You want to create a welcoming and comfortable space where your clients can receive top-quality hair and beauty services and you can showcase your skills as a stylist. With these 10 steps, you can realize your dream and launch your own successful beauty salon.

Step 1: Create a Business Plan for Your Beauty Salon

You must have a clear business plan for your beauty salon to ensure your success as an entrepreneur. A business plan for your beauty salon is essential for clarifying your vision and goals, managing finances, attracting investors, setting goals, and creating a roadmap for growth. The business plan helps you lay out your business’s specifics, often enabling you to discover some unknowns. Some topics you must consider when making your business plan include the following.

What are the costs of opening a beauty salon?

The start-up costs of a beauty salon will depend on many variants. Here are a few of the things to consider:

1. Property cost

Property cost for a beauty salon refers to the leasehold expenses incurred in renovating or customizing a rented commercial space to meet the specific needs of the salon, such as installing plumbing, electrical wiring, signs, and interior finishes. When you rent a place for your beauty salon, you may also need to pay a security deposit to the landlord, usually equal to a few months’ rent.

2. Business license and permits

The specific business licenses and permits required for a beauty salon in the USA vary depending on the state and local jurisdiction. Every permit and license requires a government fee, and the cost depends on the city and state. Failure to get all those permits and licenses can cost you huge fines or even the closure of the business.

For example, here are some of the most common licenses and permits required to start a beauty salon in Virginia.

Business License:

A general business license is required for all businesses operating in Virginia. This can be obtained from the county or the city you will operate the beauty salon.

Salon License:

A salon license is required to operate a salon in Virginia. This license is issued by the Virginia Board for Barbers and Cosmetology and includes a Salon Shop License and a Cosmetology Salon License.

Cosmetology License:

In Virginia, a cosmetology license is required for all cosmetologists, estheticians, nail technicians, and other beauty professionals who provide services in a salon.

Health and Safety Permits:

Depending on the services offered, salons may need permits for health and safety inspections, such as for sanitation, fire safety, and building code compliance.

Sign Permit:

A permit may be required to display signs outside of the salon.

3. Equipment and chairs

The cost of equipment and chairs for a beauty salon can vary widely depending on the quality, quantity, and type of equipment, but it can cost from a few thousand to tens of thousands of dollars.

4. Marketing and advertising

A beauty salon’s average ad and marketing cost can vary depending on the marketing strategies and channels. Still, it typically ranges from a few hundred to a few thousand dollars monthly.

What types of ongoing costs do I need for a beauty salon?

While you are planning your business and shaping your beauty salon business model, consider ongoing expenses of operation such as:

  • Supplies
  • Advertising
  • Equipment upkeep and replacement
  • Salaries
  • Building costs (lease or mortgage, utilities)

Who are your target customers?

As a beauty salon operator, you will profit most from repeat clients. Your services will be tailored to those you hope to serve. You want men and women who want to pay more for high-quality work. Also, you look for those who will need those services on an ongoing monthly basis.

How will a beauty salon make money?

As a beauty salon operator, you will profit most from repeat clients. You have to target those customers who may be your repeat customers, such as people who live or work in a particular geographical area. You may target those men and women who want to pay more for high-quality work. Also, you look for those who will need those services on an ongoing monthly basis.

How much profit can a beauty salon expect to make?

According to industry sources, the average profit margin for a beauty salon in the US is typically around 8% to 15% of annual revenue. Depending on the specific business, it can also range from 2% to 25% or more. Your profit will depend on several factors, such as the size of the salon, location, services offered, pricing strategy, competition, economic conditions, and business model. You may create additional income by selling retail hair care products and expanding your services as your business grows.

What will you name your business?

You may find it challenging to name your business. It’s essential to get the right name early on. It also depends on the type of business structure you choose. For instance, if you want to create a DBA account as a sole proprietorship, you will want to create a name rather than using your own name. Remember, you will also need to register your business, and naming it appropriately is important. Consider the name as you will want to use it for things like:

  • Your web domain
  • Social media platforms
  • Federal and state trademarks
  • Business records
  • A logo
hair salon tools

Image by Justin Ridgers from Pixabay

Step 2: Form a Legal Entity

The most common business structures for a beauty salon in the US are Sole Proprietorship, Partnership, Limited Liability Company (LLC), and Corporation.

Sole Proprietorship and Partnership

Sole Proprietorship and Partnership are the simplest and most common structures for small salons and offer flexibility, easy set-up, and tax benefits but leave the owner(s) personally liable for business debts and obligations.

Register an LLC for Your Beauty Salon

LLCs are also famous for beauty salons, offering liability protection, tax benefits, and flexible management while being relatively easy to set up and maintain.

Corporation vs S Corporation

Corporations are less common for small salons but can be a good option for more complicated operations, offering liability protection, tax advantages, and the ability to raise capital and issue stock. However, corporations involve more paperwork and formalities than other structures. You may consider to incorporate your business and then elect to S corp.

However, by forming an S Corp, you create a separate legal entity for your business, meaning you are not personally responsible for any debts or legal claims against the company. S corporation can give you peace of mind and protect your savings, home, and other assets. Additionally, an S Corp can provide tax benefits and increase your business’s credibility, helping you attract more clients and grow your business.

Step 3: Register Your Business for Taxes

Before opening for business, you need to register for state and federal taxes. To do this, you will first need to apply for an Employee Identification Number (EIN). It’s a simple process and involves no cost. Research your state’s business tax requirements to make sure you are in compliance. For example, some states may require you get sales and use tax account.

Step 4: Open a Business Bank Account and Open a Business Credit Card

To protect your personal assets, it’s important to use bank and credit accounts dedicated solely to your business. Having a dedicated credit card helps you establish and build business credit.

hairdresser in a beauty salon

Image by Shameer Pk from Pixabay

Step 5: Obtain Business Accounting

To fully understand the financial performance of your beauty salon, recording your expenses and income is essential. Keeping detailed and accurate accounts helps simply your annual tax filing too. If you do not have a background in accounting, consider hiring a professional accountant for your business. Remember to include this expense as you make your financial plans.

When you start running a beauty salon, you want to keep track of your finances to ensure you’re making a profit and avoiding any tax problems. Bookkeeping can help you achieve these goals by keeping accurate income, expenses, and cash flow records. For example, you can track how much money you’re making each week, how much you’re spending on supplies and equipment, and how much money you have in your bank account. With this information, you can make better decisions about pricing, expenses, and investments, which can help you grow your beauty salon business and increase your sales and profits.

Step 6: Obtain Required Licenses and Permits

If you fail to get the necessary licenses and permits, you can be subject to huge fines. In some cases, governments could shut your business down for non-compliance. Most states require some types of permits and licenses to operate a beauty salon. To make sure you cover all your bases locally check with your city or town’s government and county clerk. Also, check with your state regulatory entities. Seven states require you to obtain a state business license in addition to local licenses. Many states, like Virginia, do not require a license at the state level.

Step 7: Obtain Business Insurance

To operate safely and lawfully, your beauty salon needs business insurance. This protects your company’s finances in the case of a loss that is covered by insurance. There are many types of policies for businesses. You may need more than one type of insurance, so you may want to start with a General Liability insurance policy.

Step 8: Define Your Brand

Your brand represents your company. It sets the tone for how the public perceives your business. To stand out from competitors, create a strong brand. Consider creating your own logo to go with your brand and branding efforts.

Step 9: Create a Business Website

Once you have a business name, brand, and logo, then you need to create a website for your beauty salon business. Whether you have the expertise to build it yourself, or need to hire a web developer, consider these three points:

  • All businesses need a website – It doesn’t matter how big or small, or what industry you are in you need to develop a web presence in today’s competitive climate.
  • Social Media – Facebook, Twitter, LinkedIn, and other social media outlets do not replace the need for a website. They compliment and cooperate with a website in all your online transactions.
  • You don’t need a web developer – There are plenty of website builder tools that have basic templates that make building a website easy even for a beginner.

Step 10: Market Your Beauty Salon Business

Now it’s time to get the word out there. Consider many different options both traditional marketing strategies and online marketing for your business. You may want to consult with a marketing specialist to determine the most efficient, effective, and affordable marketing options for your location.