I was talking to a friend last week who had this really awesome salon idea focused on a new express beauty service concept.
He’s a very talented guy who’s been working in a few different salons over the past year but he has always been dreaming about starting a salon of his own.
His main challenge to make it happen was financing and if the saving he has would be enough to get going. So I started thinking – how much does it cost to start a salon?
How much does it cost to open a salon? The cost of starting a salon starts at around $62’000 for a good but basic setup in your own physical location where nail salon start up cost is typically lower than for hair salons or barber shops. Cost can be significantly higher ($500’000+) but there are also ways you can start your salon business on a much smaller budget ($2’000). Let’s look into the factors that impacts the cost and what you can do about it.
Questions to Ask Yourself That Will Impact the Cost of Opening Your Salon
There are many different things that can and will impact the cost of starting your salon and you will have to take several decisions over the coming weeks and months that ultimately determine the cost.
Before you embark on this, there are a few questions that I believe are important for you to consider as the answers to those questions will help guide decisions that will influence cost.
Where do you see your salon in 5-10 years from now?
Try to create an as vivid picture as possible in your mind about where you and your salon business 5-10 years from now.
What does your salon look like? Who are you working with? What’s your clients like? What does it feel like to be there?
This does not mean that what you’re imagine is where you should start your business. However, having a vivid picture in your mind of where you eventually will be will help guide you, even if subconsciously, in many decision along the way to get there.
What is the type of salon you want to start?
The salon start up cost will vary depending on if you plan to start a nail salon, a spa, or a hair salon as equipment and space needed is different.
Do you have an existing clientele?
If you know you have a list of clients who will flow through your door as soon as you have your new place open you have come a long way. This will give you more flexibility when choosing your location as you are not as dependent on getting new clients from the street into your salon.
If you do not have an existing clientele you may want to go for a setup where you can benefit from getting new clients effectively.
This could be by renting a space in an existing salon or in a shop with high traffic of people.
If you are still set on having your own physical salon, you probably want to make sure that it is based in an area where there is natural traffic of people outside your salon. An option is of course also to start smaller, build your clientele, and only later move to your own physical location.
How important is a social life with colleagues to you?
Being surrounded by colleagues is very important to some people. I have seen businesses fail because the founder started the business alone where the only social interaction was with the clients.
If you know that you are a person that get your energy from working and socializing with other people, I would strongly encourage you to find a format for your salon that will allow for this. On the other hand, if you get energy from working on your business alone, you should consider the opposite.
What other things are important in your life right now?
Starting your own salon business will take up a big part of your life. For this to work, you need to make sure you can do it in balance with other things you have going on in your life.
For example, is flexible work arrangement important for you? Do you want to be able to take holidays and travel? Or do you want to dedicate 100% to your new salon business to truly grow and establish a new salon and brand and having employees dependent on you?
Do you want to create your own brand or rather build on something that already exists?
Setting up your own salon allow you to establish your own brand. A brand that reflects your values and how you want your salon image to be perceived.
But this is not your only option.
You can also join an established salon franchise or buy an existing salon with its brand and name. Joining an existing franchise allow you to benefit from an already well established name, proven service concepts, and existing marketing channels.
There are pros and cons with both approaches but what’s most important is that you go with what you feel is right for you.
How much capital do you have available to invest and what level of risk are you ready to take?
More money obviously provides more alternative options for the salon you want to open up.
If you have the finances to open a bigger salons, with multiple chairs, you can benefit from economies of scale. However, this will increase your financial risk in case the business does not turn out as planned.
It is important you find a model for your salon that fits the finances you have at hand and the risk you are ready to take. If you push yourself too far here you will have a stressful time ahead of you with sleepless nights worrying about your finances.
Your Own Salon vs. Renting a Space at an Existing Location
The physical location of your salon will most likely be your biggest expense as you start your new salon so you want to make sure you think this through properly.
Having your own physical salon location gives you the full flexibility to set it up as you want it. This is what most people planning to start a salon dream about but it is also the most costly approach. Having your own location also means you alone need to build the salon clientele.
An alternative to this is to rent a chair or booth in an existing salon or shop. This does not give you the same flexibility and your business potential is naturally limited to you within the space you are renting. However, it will significantly reduce your cost as you set out as you probably will get access to equipment and supplies as part of your rent. The location you are renting at will likely also help bring you new clients so this is typically a preferred approach if you do not have an established base of clients yet.
Let’s take a closer look at these different options and what costs to expect for each model.
Your Own Physical Salon
Renting vs. Buying
As you start looking for a location for your salon you’ll likely find locations you can buy, lease, or rent.
Buying a location can in fact be cheaper than renting but it requires that you have the financial ability to get a mortgage for the location. You will also need at least $15’000-70’000 in cash for the initial down payment for a $100’000-$700’000 property investment. Leaving you with a $1’000-2’000 monthly mortgage.
The cost of buying a space for your salon varies greatly depending on the location and standard of the property so make sure you do some good research in the area where you are looking to open your salon first.
Also the cost for renting varies by area and you can find an average annual cost per square foot for most areas. To rent a salon location in a shopping mall or on a high traffic street can cost $25/sqft while if you go further away the cost can go to $10/sqft.
Depending on location the landlord may also add additional fees to cover for example maintenance of common areas. Make sure you take into account the total cost for rent, utilities and other fees when selecting a place to rent.
What’s the Average Square Footage of a Salon?
To give you an idea of the right salon dimensions, among the 550’000 salons and spas in the U.S. the average size is 1’500 sqft.
I would say that if you have a salon of that size you have good room to grow your business. It is also possible to manage in a smaller location but you will need to smartly consider the furniture that you install to optimize the space.
Cost for Taking Over an Existing Salon
Taking over an existing salon will minimize major renovation interventions on the property as it is already built out to support salon operations.
You will also get the salon equipment you need to get going from day one. And, more importantly, by taking over an existing salon you’ll also benefit from the existing clientele built up by the previous owners. However, if you buy the full salon with operations as it runs today you will of course want to make sure the the style of the salon and it’s clientele is in line with the type of salon you want to run and also the current trends.
The cost for taking over an existing salon starts at $62’000 and assumes you rent the location with the below upfront investments.
|Rent deposit||$4 500|
|Buy out current salon||$10 500|
|Leashold improvement||$15 000|
|Initial Supplies||$8 000|
|Initial Inventory||$4 000|
|Certifications/ Licenses||$4 000|
|Legal or Consulting Fee||$1 000|
The cost can of course be significantly higher if you buy a salon with a well established brand that is has proven to be profitable today.
Cost for Starting a Salon From Scratch
Starting a salon from scratch by renting a new space and turning it into a salon comes with benefits.
You have more options of location on the market to choose from and you will be able to build the salon up exactly the way you want without worrying about the image and reputation of the previous salon.
The drawback of building out a new salon from scratch is that you will need to invest substantial money up front to turn it into a salon with renovation and new equipment.
No one will know about the salon either so you will need to be prepared to do some marketing in the beginning to establish the salon in the neighbourhood.
The cost for opening a salon from scratch starts at $90’000 assuming you will rent the location. Below is a break down of the cost.
|Rent deposit||$4 500|
|Buy out current salon||$0|
|Leashold improvement||$35 000|
|Initial Supplies||$8 000|
|Initial Inventory||$4 000|
|Certifications/ Licenses||$4 000|
|Legal or Consulting Fee||$1 000|
Rent a Space in an Existing Salon
Renting a space in an existing salon or shop is often referred to as “booth rental” or “independent contracting”.
Benefits of booth rental:
- You can benefit from an existing clientele in the salon. Now this is not the same as being employed where it is the salon owner’s responsibility to bring you clients but you will still benefit from drop-in and referrals from salon colleagues.
- You share costs with others in the salon. Costs for utilities, cleaning service, furniture, and maybe receptionist is often part of your rent cost.
- You don’t need to own large retail stock but can often earn commission from the landlord instead.
- You will be surrounded by colleagues that you can learn from and socialize with.
- You will lower your business risk as there are limited up front investment needed.
What’s the Cost for Salon Booth Rental?
The average cost to rent a chair in a salon in the US is $400/month but can range from $250-$1’200 depending on location and what is included in the rent. In fact, I have seen examples up to $1000/week in trendy big city ares but this is for exceptional locations.
What Other Start Up Costs Should You Consider?
I hope you now have a fairly good idea of what type of physical location you will need for your salon. Again, the location is the biggest expense you will have in the beginning but there are also other costs you should plan in your salon start up budget.
I have summarized the most common ones below:
- Initial salon supplies ($2 000-$10 000): You will need services accessories like styling tools, perm rods, aprons, towels, service products etc. which can quickly add up to a sizeable cost. To get a good idea on what equipment you’ll need when starting your salon, I have created a specific post that gives a complete list of salon equipment you’ll need when starting your salon here.
- Marketing ($500-$15 000): As you establish your new business you will need to invest in defining your new salon brand as well as run some marketing activities to make people aware of that you exist. This cost can vary a lot and would include things like creating a logo, producing business cards, setting up a website, and creating your social accounts. For complete list of marketing activities you should consider for your new salon, check out my list of proven salon marketing activities article that will grow your business.
- Insurances ($500): Insurances are a legal necessity and you also want to make sure you are covered properly as you set out on your new adventure.
- Salon business software ($100-$2 000): You will save a lot of time and money down the line by investing in a good solution that will help manage your bookings, POS, and accounting. Salon Iris is a popular solution I would recommend.
Common Monthly Salon Expenses
On top of the upfront investments you should also consider your ongoing costs. You should make sure you have some spare budget available to cover at least 2-3 months of expenses without any income as it may take a few months to full get your salon up to speed and generate income.
- Rent or mortgage payments ($400-$3 000)
- Wages ($4 000): Even if you do not employ anyone at start you should not forget to plan a wage for yourself
- Utilities ($150-500): Cost for electricity, water etc.
- Facility maintenance ($300): There will always be some work needed on the facility to maintain it at the state you want so make sure you plan room for this in your budget.
- Education ($50): Continues investment into yourself and your team is importnat for the long term success of your business so you should set aside money for this as well.
- Buffer Budget ($200): As a business owner you’ll always have some unexpected expenses.
Creating Your Salon Start-Up Budget
You should now have a good idea of what expenses to expect as you set out to build your new salon business. You have an exciting journey ahead of you that will bring you a lot of joy but also hard work and as an entrepreneur you will go through difficult times.
You can reduce the stress that comes with setting out on a new business venture significantly by making sure you have a solid view on the costs you will have as you start out. I would highly recommend that you plan your finances so that you can cover your start up costs as well as the first six months even if you fail to meet your planned income target. This will give you more confidence and less sleepless nights.
When you have a view on the costs, planning your budget should not be difficult. Create an Excel spreadsheet where you list all your start up cost you can think of as well as your expected monthly expenses. You’ll have a lot to gain from investing time now in understanding how much to expect from each of the cost elements of your budget.
I would be happy to hear from you if you found this article helpful or if you have more any ideas of how I can make it more complete. Please share your thoughts, questions, or your own experience in the comments box below.
Have a great day!