People seek beauty. They are constantly looking to improve what they have or give themselves a whole new look. They drop by the nearest hair and beauty salon to be pampered by stylists and beauticians to style their tresses, shape their eyebrows, and color their nails – all for a few (or more) bucks. An hour in a hair and salon shop every month and one emerges confident and ready to take on the world.
It is no wonder that hair and salon business remains one of the rapidly growing industries today. According to the Service Annual Survey of the Bureau of Census, the U.S. hair, nail and skin care services saw a growth spurt in 2001, with revenues increasing by 78 percent from 2000.
In 2011, the beauty shop industry reached $19.067 billion in revenues, while nail salons’ estimated revenue is 2.234 billion. According to industry insiders, the growing popularity of day spas accounts for the increase in sales on the hair and salon industry.
The hair and salon business can be started with moderate capitalization. Success in this venture depends on the ability to provide a consistently high customer satisfaction. The successful hair and salon business is one that offers excellent service, use quality products, and provide an enjoyable atmosphere at an acceptable price. Customers of this type of business are willing to pay a higher price to an operation that can satisfy the client’s desire for improved physical appearance and even mental relaxation.
Services Offered by Hair and Salon Businesses
Hair and salon businesses range from the “$15 budget haircut only” to upscale full-service hair, nail and day spa services that could pitch a price of a few hundred. There are even hair salons that don’t cut hair: instead, these blow-dry salons simply do a quick wash and blow-dry.
A typical full-service hair and salon business offers all or any of the following services:
- Hair: haircuts, trims and style; highlights/foils & weaving; hair & scalp treatments; relaxers, perms; colors; shampoo and conditioning; curling, reconstructing, permanent waving
- Nails: manicures, pedicures, polish, sculptured nails, nail repair, hand conditioning treatments.
- Skin Care: Facials, body waxing, massage.
- Sale of professional hair/beauty products: Many salon businesses also offer a wide range of hair and beauty products in order to provide everything a customer needs in one convenient location. You can choose to sell top-of-the-line beauty products shampoo, daily and deep treatment conditioners, hair styling products such as mousse, gel, pomades, among others; and other specialty hair products. Retailing professional hair products is an important strategy for retaining clients and making additional profits.
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Some hair and salon businesses also offer spa services, a growing niche in the salon business. Day spas offer services such as body scrubs, skin lightening, body wrapping, herbal wraps, massage/aromatherapy, derma abrasion, stretch mark and blemishes, anti-aging, facials, makeup, skin care, waxing, polishing, and anti-acne treatments.
Start Up Requirements
The amount of capital you need to start the business depend on the type, quality and choice of salon design, rent and utility deposits, fixtures, leasehold improvements, opening inventory, and equipment that you intend to use.
Key start-up expense components of a hair and salon business are:
Salon space. Unless you live in a big house with room for a salon and in an area with favorable zoning restrictions, you will need to rent space for your business. Depending on the type of your operations, you may need space anywhere from 500 to 2,000 square feet.
Many cities allow salons to be located within a residential area, but with zoning restrictions, it may be difficult to operate a salon as a home business. In particular, some residents may not tolerate the flow of traffic as well as parking in your neighborhood.
Personnel. The number and type of personnel you need to hire will depend on the services that your hair and salon business will offer. Typically, a salon will require one to several stylists and a receptionist. Other personnel that your business may hire include shampoo technicians, barber, nail technician, facialist, make-up artist, and a massage therapist.
Leasehold improvements. You may need to undertake leasehold improvements to your space based on your interior layout, design, and plumbing requirements. Leasehold improvements are defined as the construction of new buildings or improvements made to existing structures by the lessee. As the lessee, you will have the right to use these leasehold improvements over the term of the lease. In many states, however, these improvements will revert to the lessor at the expiration of the lease. Moveable equipment or office furniture that is not attached to the leased property is not considered a leasehold improvement.
Salon Equipment. The equipment you buy will depend on the services you offer. Some of the basic equipment you need to purchase include washing basin, styling chair, hair dryers, supply trolleys and manicure sets and aprons. Other equipment you may need include shampoo spray machines; facial bed, hair steaming machines, and other body/skin care instruments. If you are planning to sell beauty products, you also need to invest in inventory.
Contact the beauty salon equipment suppliers and check if you can get a good deal. You can also look into alternative sources such as eBay where lower-priced equipment is up for bidding.
You can choose to spend anywhere from $2,000 to $30,000 for salon equipment alone. You may also need initial training, professional and licensing fees, and at least three months of working capital.
Other start-up expenses may include:
- Cash register
- Merchant account fees (to accept credit cards)
- Business license fees and other required documentation (varies by state)
- Professional fees (accountant, lawyer, etc.)
- Signage costs
- Initial marketing and advertising expenses
Depending on the range of the services you offer and the overall look and design of your salon, you can spend anywhere from $10,000 for a bare bones operation to $100,000 for a full-service outfit to jumpstart your salon business.
Hair and Beauty Salon Business Success Tips
The keys to success in the hair and salon business are:
1. Keep your clients satisfied.
A salon’s best marketing tool is word-of-mouth. If a client is happy with the results, he or she will come back to your salon; after all, it is all a question of trust. Satisfied clients can then help advertise your business to their friends, family, and colleagues. Word can easily spread about the great look and outstanding personal service that your salon provides. It is important that your business creates and maintain the desirable reputation as a quality hair and salon operation.
2. Choose the right location
The location is critical to the success of your business. You need a location that is strategically situated on one of the busiest streets in your area, if not in a mall. Some salons employing well-known hair stylists (e.g. “stylists to the stars) can put their business anywhere and still, clients will flock to them. If you don’t have a well-established reputation in the business and a long list of loyal clientele, find a high-profile location with an easy access from all parts of town.
3. Offer a clean and safe atmosphere.
Salons thrive in an environment that is clean, safe and relaxing where customers can receive prompt and professional service. Cleanliness is a particularly important element that can draw clients again and again. Your clients must be able to trust that the products and tools that you use on them are of top-notch quality and safe. You cannot afford to put your clients at risk from infections, as it could damage your reputation.
Irrespective of size, salons should be scrupulously clean with the cleaning, disinfecting and sterilizing of equipment and work areas undertaken several times (not just once) a day, preferably at the start and end of the day and in-between clients. Be sure your towels, footbaths, and other equipment are washed, clean and odor-free.
Salons offering a wide range of services in one setting have a distinct advantage over those who offer only one or two types of services. Many clients prefer to have their hair, nails or face done in one place, instead of going to three different places. While you can specialize in one main area (e.g. hair), giving your clients the convenience of a one-stop beauty shop can set your business apart from your competitors.
5. Hire qualified and trained personnel.
The cosmetic procedures performed by untrained personnel may cause health problems to the clients. It is important that you hire only qualified and well-trained beauticians, stylists, and other personnel. Experience may give a beautician the expertise to render treatment, but, without proper training, she would be unaware of the merits and demerits of procedures. It is your responsibility as the salon owner to ensure that your personnel is adequately trained and understand each procedure offered.
You need to be aware of the liabilities that you and your business can be subjected to as a result of accidents and botched procedures (from rashes resulting from improper waxing procedure to damaged hair). Check with your insurance company on policies that can protect you and your business from liability and lawsuits that may arise from customer complaints.
Also, consider providing training classes on a regular basis to your personnel to improve their product knowledge and skills as well as awareness to trends.
6. Save on personnel costs.
Personnel will be one of the biggest recurring expenses of a hair and salon business. To save on expenses, you can arrange for everyone but the receptionist to be contractual workers to be paid a sliding commission scale based on the amount of revenue created.
It is important to remember that the hair and beauty salon business can be challenging because of slim profit margins and periods of low activity during the week. The success of this business hinges on volume — so if you can’t pack customers in the mornings during the week, you need to be able to get more people to come in on Fridays and Saturdays to compensate for the slow business times during the week.
Recommended Books on Starting a Hair and Beauty Salon Business:
- How to Start Up & Manage Your Own Hair Salon: And Make it BIG in the Salon Business
- How to Start & Manage a Hair Styling Salon Business
- The Salon Building Bible (READY, SET, GO! Books)
- 50 Effective Ways to Promote Your Hair Salon: Keep Your Clients Loyal and Gain New Clients!
- Passion: A Salon Professional’s Handbook For Building a Successful Business
- How to Open a Beauty Salon Business
- Stylist to Salon Owner: 5 Helpful Tips for Making the Big Move
- How to Start a Tanning Salon Business — With Nothing?
- How to Earn Money as a Wardrobe Consultant or Fashion Stylist
- Starting a Home-Based Secretarial Business