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Costs to Start a Hair Salon

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There are various costs to start a salon business. There are, of course, the start up costs to get your business off the ground. There are also ongoing payments to make including staff pay, supplies and insurance. Here’s a rundown of the main costs involved in running a salon.

Startup Costs

It’s a general rule of thumb that most salons will want to have at least five or six chairs, with a stylist for each. You’ll need approximately 1000 square feet of building space to accommodate a salon of this size, which will run you an average of $75 – $100 per square foot to get started. It could take you several months to get your business off the ground. That’s rent you’ll be paying without any income being generated. You’ll spend this time setting up your salon, hiring personnel and obtaining supplies.

Staff

Your staff is the lifeblood of the salon. You’ll want to hire personnel who are professionals. That means people with expert knowledge, the willingness to constantly learn and the dedication to doing the job right. You’ll also look for people with personalities that will complement your own and work well with clients, as well as colleagues. Finding the right combination of individuals to comprise your team will take time.

Payroll is one of the biggest costs in running a salon. There are a number of ways to pay design staff. Some are paid on commission, earning between 35 and 60 percent of their services. Many salon owners will base commission on the number of clients stylists bring in or by amount of experience the stylist has. There is also what’s known as “booth rental.” In this model, each hair designer pays a weekly rent in order to base his or services in the salon. Support staff such as hair washers and administrative staff need to be hired, as well.

Other Ongoing Expenses

Finally, there are a number of expenses that are ongoing for salons. You can expect to pay these on a monthly or at least regular basis for the duration of your business. Payroll taxes at 7.6% of sales is a big expense, along with insurance costs at around 2% of total profits. Your supplies will run you between 2% and 8% of your total revenue, depending on whether you’re a high-end or budget salon. There are also costs involved in owning or renting the building your salon resides in. Maintenance costs will be about 3% or so of your earnings, while rent or property taxes will likely eat up between 3 to 10 percent based on location.

Another essential cost of running any business is in advertising and marketing. You need to invest in these things in order to bring in regular clientele. It’s unlikely you’ll be able to depend on word-of-mouth and repeat customers alone, especially in the early months. These expenses will be between two and five percent of your business costs. In order to keep up with the trends, you’ll want to set aside about 2% for continuous training. You can bring representatives from product manufacturers into your salon, as these corporations often hire consultants to train salon staff in utilizing their products. You can also send staff to workshops or classes held offsite.

These are the main expenses involved in the costs to start a salon. Keep them in mind when planning your salon business in order to ensure your expenses remain in check and that your business will be financially successful and solvent for years to come. The beauty business is generally one which can withstand tough economic times, but careful financial planning and a bit of business know-how can take your salon far.

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