Looking to open a hair salon business, but wondering how much it’s going to cost? The amount of capital required to get started can vary greatly depending on a variety of factors including how you obtain your salon space, how many stations you have, the decor you choose, and more.
To help you get a better understanding of what your hair salon costs will be, here’s a look at common startup expenses such as:
- Licensing, certifications, permits, and insurance
- Leasing, buying, or building your salon location
- Salon equipment, decor, and supplies
- Salon marketing expenses
Hair salon costs
Starting a successful salon requires creating a welcoming space that attracts your target clientele. The process begins with ensuring all the legal boxes are ticked. From there, you need to find the right space, equip it, decorate, open the doors, and spread the word. But what should you expect to pay for all of that? Here are some of the average costs to give you a ballpark idea.
Legal requirements to open a hair salon
First things first, before thinking about opening up a hair salon business, you’ll need to take care of a few housekeeping items. The legal requirements for new hair salon owners vary depending on where you live so be sure to check with your state and local governing authorities to find out what you need to do. Generally, you’ll need to have your cosmetology license, a business license, health and safety permits, a seller’s permit, and insurance.
- Cosmetology license: All 50 states require professional hairstylists to earn their cosmetology licenses. Fees average around $175, and the time required to gain the license averages 386 days of education and experience. See a full list of the state requirements for cosmetology. That said, entrepreneurs who are only going to own the salon and not work in it may not need a cosmetology license. Further, if you’re going to open a nail salon, you may only need your nail technician’s license (this varies by state).
- Business license: You will likely need a business license from your state government, and may also need one from your city or county. The cost can range from $15 to several hundred dollars depending on your business type, business size, and location.
- Permits: If you plan to sell retail products in your store, you’ll probably need to get a sales tax permit and/or a retail seller permit from your state (a.k.a. resale ID, reseller number, resell permit, permit license, etc.). Often, a reseller’s permit is free or less than $50. You will likely also need to pass an annual inspection and obtain a health permit from your local health department to ensure you comply with sanitation regulations.
- Certificate of Occupancy (CO): Your local government may require a CO certificate. It involves an inspection of your building to verify that it’s compliant with local codes, zoning, and safety requirements for your business type. Costs can vary but will likely fall around $250.
- Insurance: Hair salons don’t operate without risks. To ensure you’re protected, you’ll need a Business Owner Policy (BOP) which includes coverage types such as general liability insurance, commercial property insurance, professional liability insurance, and workers compensation. The average cost for a BOP is about $99 per month or $1,191 per year.
These are the basic legal requirements you should know and be prepared to pay for when opening up a hair salon.
Your salon location
Next, the biggest expense you’re likely going to encounter will be the cost of the physical building for your hair salon. You have a few options when it comes to how you acquire a space — you can lease, buy, or build. Of course, the route you choose is going to greatly impact your costs. Here’s a closer look at each of these options.
Lease a salon space
The most affordable and flexible option is to find an existing commercial building for rent that’s a good fit and to sign a lease agreement. In this case, you’ll agree to pay a certain amount per month for a specified period of time.
For example, a 912 square foot space in a commercial development in Austin, Texas costs $17.00 per square foot, per year. That amounts to $15,504 per year or $1,292 per month. Additionally, you usually have to put down a security deposit and a few months of rent in advance.
The cost of leasing a commercial space is going to vary depending on not only your city and state, but also the area of town, local demographics, and surrounding developments. While the average rates for retail space in the U.S. sit around $18.09 per square foot, per year, the more popular an area is, the more it’s going to cost. For example, average gross rates in New York are $81 per square foot, per year. However, a good location can warrant your business to charge higher service prices which may cover the higher rent costs.
An advantage of leasing a retail location is that if you want to relocate, you don’t have to sell any property. When your lease is up, you can simply find a new place to lease or buy, move, and continue business in the new location without much hassle. The downsides are that you will have limited control over what you can do with the space, you won’t be building equity with your lease payments, and you could potentially get kicked out.
Buy a salon space
Another option when you want to run a hair salon is to buy a piece of commercial property, possibly even an existing salon.
When doing so, you can purchase it outright or get a Commercial Real Estate (CRE) loan that enables you to pay it off over time. If you finance the property, you will have to get approved and make a down payment upfront. If you buy it outright, you will need to have a large lump sum at your disposal.
Either way, when you buy instead of lease, you’ll gain equity in the property. Further, real estate generally appreciates over time which can help you gain a return on your investment if you sell it down the line. You’ll also have full control over the building and can get tax breaks for interest and non-mortgage expenses.
On the downside, if you want to move to a new location, you will have the responsibility of deciding what to do with that real estate (i.e. sell it, rent it out, etc.). It’s not as simple as moving and getting another lease.
Build a salon space
Lastly, if you can’t find an existing property you want to buy, you can build one. In doing so, you’ll have complete creative control of how your salon will be laid out. However, going this route is often going to come at a higher cost and will also delay the timeline of opening your salon. Further, you face more risk as things may go wrong during the building process which can cause unforeseen expenses and delays.
Once you have your salon location squared away, it’s time to get the interior ready for business. From salon software and cleaning supplies to hairdryers and styling stations, there’s a long list you’ll need to add to your salon startup costs. Here’s what to keep in mind.
First, you’ll need a reception area where clients are greeted and can wait for their turn with a stylist. This area should have a welcome mat to help keep your floors clean and absorb water, dirt, etc. from outside. Beyond that, there should be a reception desk with a phone, business cards, a logbook, a computer, and a point-of-sale system. You should also have comfortable seating for clients and reading material. Additionally, the reception area is commonly where salon owners feature a display rack with retail products such as shampoos, conditioners, and other styling products.
Here are the average costs to keep in mind:
- Commercial welcome mat ($100)
- Reception desk ($1,500)
- Phone and internet service ($100)
- Computer ($800)
- Business cards ($100)
- Salon POS system ($300)
- Furniture ($2,000)
- Retail display racks ($1,000)
Average estimated cost: $5,900
You’ll also need to fully equip your salon’s styling station(s). The number of stations you need will depend on the size of your location and the number of employees or contractors you plan to have working. At each station, you’ll need a variety of items, including:
- Salon chair ($200)
- Styling unit with mirror and shelves ($600)
- Hair salon equipment (hair dryers, clippers, curling irons, flat irons, brushes, combs, spray bottles, gowns, etc.) ($600)
- Beauty trolleys ($100)
- Styling products ($500)
Average cost: $2,000 per station
You’ll also need a shampoo station in your salon where hairdressers can take clients to wash their hair when needed. This area will need:
- Backwash units ($1,000 each)
- Shampoo and conditioner ($200)
- Towels ($30 each)
Average cost: $1,230
Other salon supplies
Aside from the basics, you’ll need other things around the salon to keep business flowing smoothly. For example, a washing machine and dryer are essential to keep up with the laundry from towels alone which can run a thousand dollars. You’ll also need to stock the bathroom with toilet paper, soap, toilet seat covers, and paper towels. Then, there are all the cleaning supplies including a mop, broom, vacuum, trash bags, and antibacterial cleaning products. These will account for a few hundred dollars.
Don’t forget about your retail signage. People won’t know about your wonderful salon business until you put that shiny new sign outside. Sign design and installation typically costs about $450, on average, per sign.
A salon’s decor helps to set the tone for a business. It’s important that you spend time thinking about the experience you want for your clients and how the interior design of the business will influence it.
For example, are you going for a sports-themed barbershop? In that case, you’ll likely want to create the vibe with multiple flat-screen TVs mounted on the walls and sports memorabilia around the space.
On the other hand, are you wondering how to open a natural hair salon? You may want to go with a minimalist, upscale feel. That could mean painting the walls a neutral color and investing in earthy art pieces.
The amount you spend on decor can vary greatly depending on your type of salon, branding, and target audience. However, you should include a few thousand in the budget to ensure it’s a welcoming, on-brand environment.
Marketing your beauty salon
In addition to getting your own salon set up, it’s important to think about how you will get new clients through your doors. Opening up a hair salon business alone isn’t enough, you need to spread the word!
It’s a good idea to plan your marketing strategy when writing up your business plan. In most cases, you’ll need a website ($6,500) and a social media presence (can DIY or hire someone for about $1,500 per month). It’s also important to get listed on a variety of online directories and to implement a local SEO strategy (approx. $2,800 per month).
Average cost: $10,800
How to finance a hair salon
Now that you have an understanding of the upfront costs to open a new salon, what’s next? If you don’t want to pay for all of the startup costs out of pocket, or can’t, you can turn to financing solutions.
Business or personal credit cards are one route, however, they typically come with high annual percentage rates (APRs). If you can find a promotional offer with 0% APR for a set period and pay the balance down before it ends, that can be a good solution.
Another option is to get a business loan. Business loans provide you with a lump sum upfront that you can pay back over a set term. They often have better interest rates than credit cards and offer higher loan amounts.
Not sure where to start? Biz2Credit has helped over 20,000 businesses to get the funding they need to grow, including other salon owners. With decisions in as little as 24 hours and a variety of loan types, apply online today to see what you can get.
Apply with Biz2Credit to fund your hair salon!