Start a beauty salon by following these 10 steps:
- Plan your Beauty Salon
- Form your Beauty Salon into a Legal Entity
- Register your Beauty Salon for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Beauty Salon
- Get the Necessary Permits & Licenses for your Beauty Salon
- Get Beauty Salon Insurance
- Define your Beauty Salon Brand
- Create your Beauty Salon Website
- Set up your Business Phone System
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your beauty salon. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a beauty salon?
Experts recommend you have at least $60,000 before opening a beauty salon, but this number is highly dependent on the property costs in your area and the number of chairs you plan to have (1,000 square feet will fit about 6 chairs.) Equipment will typically cost around half the initial capital, or around $30,000. The costs of licensing to operate vary widely (anywhere from $100 to $2,000.)
Advertising costs should also be factored in, with television time costing up to $15,000. If you choose to use a pay-per-click model for digital ads, your costs may be substantial due to the ubiquity of beauty salons.
What are the ongoing expenses for a beauty salon?
Owners can expect to pay for the following expenses:
- Equipment replacement (wear and tear on chairs, dryers, etc.)
- Building costs (e.g., utilities, permits, upgrades)
Who is the target market?
Beauty salons will profit most from repeat clientele. You’re looking for men and women who are willing to pay more for quality work, and those who need set services every month.
How does a beauty salon make money?
Beauty salons make money by exchanging beautifying services for money. It is important to find the right profit margins for your services. Some salons use a base rate for coloring or haircuts. A good rule of thumb is to look at the pricing structure of other salons in the area, and aim for a middle-of-the-road approach. Customers do have their budget limits, but they may become instantly suspicious about the quality of work if the rates are too low.
How much can you charge customers?
The exact amount to charge customers will be dependent on where you are, who your clientele is, and the experience of the stylists. Celebrities may pay up to $800 for a hair service and $200 for their nails. Typically though, you’ll want to set your stylists up on a tier setting, with junior stylists charging around $30 for a cut, intermediates charging around $40, and masters charging $50 to $60. Manicures and pedicures can be anywhere from $15 for a basic treatment to $30 for a spa manicure.
How much profit can a beauty salon make?
On average, profits can be up to 15% of the total amount your salon brings in. You can also make additional money selling retail products, such as specialty shampoos and conditioners. Should you want to make additional money, you’ll need to adjust your service prices, but increasing prices may scare off customers.
How can you make your business more profitable?
Look for the ways you can make your customers look better based on their needs. For example, if you have a lot of middle-aged women coming in, offer more services to lift and refresh aging skin. Look into bringing in cosmetic specialists from time to time for special events (e.g., offer Brazilian hair straightening for a month.) There are a variety of new trends that hit the market, like vampire facelifts and sunset coloring that can drive interest and set your salon apart. You can also franchise if your business grows large enough, but 99% of beauty salons have a single location.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Beauty Salon Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your beauty salon is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a beauty salon. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A beauty salon is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a beauty salon.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your beauty salon will be in compliance and able to obtain a CO.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a beauty salon
Find out what a customer wants and then start filling in the gaps. For example, there may not be many salons open late on weeknights or you may have better quality color treatments that last longer than other salons. You may want to set up a referral or loyalty program to encourage customers to promote your business. These discounts will ensure that the customers promote your business and return for your services themselves.
Your customers are likely to be on social media, which is the perfect place to market. Take pictures of all your successes and constantly update your feed — even if interest is low at first. If you have a specific trend that’s happening in the area (e.g., sunset color), then this should be heavily visible on Instagram and Facebook company pages.
How to keep customers coming back
Focus on making each customer interaction a success. This will help customers to associate success with your services, and it will also lead to them telling others they know about your business. Think about the customer experience from every angle: finding the salon, getting to the salon, parking, exiting, etc. Be proactive on sites like Yelp, and never leave a complaint unanswered. Be generous if you want to get people’s attention. Ten percent off may seem like a lot to you, but it’s not likely to impress someone who already has a relationship with another salon.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.
Recommended Business Phone Service: Nextiva
Nextiva is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
Start A Beauty Salon In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is right for those who care about making others feel better about themselves by way of improving their appearance. Owners do not need to be licensed in cosmetology if they do not planning to administer any services, but it is strongly recommended to have cosmetology training so you are knowledgeable about the services your business offers. Ideally, the owner will be a very sociable person, as you will need to build relationships with clients in order to create returning customers.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a beauty salon?
To a certain extent, owners can decide how much they want to be involved in the business. An owner may hire managers to ensure the salon is running smoothly, while they concentrate more on investing in the new ventures and trends. However, here are some of the usual duties of beauty salon owners:
- Finding a space with a good deal of foot traffic
- Advertising the salon (web, print, television, etc.)
- Ensuring inventory is stocked
- Analyzing current and future customer demand
- Performing styling duties
- Managing employee schedules
- Ensuring cleaning procedures are followed
What are some skills and experiences that will help you build a successful beauty salon?
Typically, the most successful beauty salons have owners who understand the ins and outs of how a beauty salon functions. Therefore, experience working in a salon can be very beneficial. Many employees will not only need a license to operate in the US (education requirements vary from state to state), but they need to seek out additional education to keep their license as time goes by. Owners should know and understand how each service should be administered to keep quality levels high. There will also be a certain amount of intuition needed, alongside standard business sense, to keep clients impressed both in person and behind the scenes.
What is the growth potential for a beauty salon?
Depending on the space you get, the potential can be unlimited. Along with common menu items like waxing, manicures, and pedicures, consider either offering or leaving the door open for spa features like steam baths, or skin treatments like Botox.
A beauty salon’s growth is rooted in being able to keep up with the market. Your ideal customer may want standard and familiar (e.g., a manicure) or something a little more risqué (e.g., vampire facelifts.)
Once your business has a steady flow of business, it is possible to open a second or even third location to maximize the reach of your business.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a beauty salon?
You’ll likely need to give discounts at the beginning to entice customers to stray from their usual place to come to yours. The double-edged statistic to remember is that a beauty salon can experience up to 25% turnover in any given year. That’s a decent amount of customers to come and go, but it’s helpful for salons trying to gain a foothold in the market.
Concentrate on defining the customer you want, and then start finding out where those people are. Partner with other businesses to start getting more referrals, and hire someone who can make your website really stand out — both when a customer searches for salons in their area and after they click on your website.
How and when to build a team
Your stylists and technicians will make or break the business, so they need to be both friendly and exceptionally competent. It is better that they’re capable rather than overly social, but you really do need both to keep people coming back. Teams need to be built at the very beginning, and additional hiring should only occur if new services are being offered, the space has been expanded, or the demand calls for it.