How Much Does It Cost To Open A Hair Salon

Updated: Jul 20, 2019

Nowadays, hair salons remain one of the fastest growing types of business.


Your dream is becoming a successful salon owner, but you’re probably wondering "How much does it cost to open a hair salon" or "Whether you can open a hair salon with moderate capital or not".


The exact startup cost will vary greatly for each salon depending on a particular business model and goal, the size and the location. Even though there is a lot to consider, the startup components remain the same.


That’s why we create this hair salon startup cost list and companion guide - to help you parse through the details and get started right.


1. Equipment Costs


a. Choosing a location

The first thing you should consider is choosing a place to locate your hair salon business that you can buy, lease, or rent.


If you are planning to start a small business then an in-home salon may be the right option for you. An in-home salon is the least expensive option since it would not require any extra rental payment each month. However, your home must be large enough to place all the necessary salon equipment and your living zone should be separated.


In case you cannot afford the requirements above to open an in-home salon then you will have to buy or rent a commercial space.


Buying a location, in fact, can be cheaper than renting but it requires that you have the financial ability to get a mortgage for the location.


The costs may vary by area and size, and it’s always a good idea to do comparative research within your desired location.


b. Furniture


The facilities needed for your salon depends on the type of services that you will offer.


Hair Salon Basic Equipment List:

  • Service Accessories ( $150)

  • Combs & Brushes ( $100)

  • Scissors/ Hair Cutting Shears ( $150)

  • Electronic Hair Styling & Grooming Equipment ( $300)

  • Styling Chairs/ Salon Chairs With Accessories ( $750)

  • Ring Light ( $150)

  • Cart & Supply Trolley ( $190)

  • Shampoo Station/ Backwash Unit ( $800)

  • Hood Dryer/ Hair Blow Dryer ( $600)

  • Hair Styling Station ( $600)

Besides, you will also need a cash register machine, a computer, a desk, and phones for receptionist.


Cost estimation for full equipment is about $10,000. This exact cost may vary depending on the size of your salon and the amount of those types of equipment.


2. Legal And Consulting Fees


You may need professional help with preparing for legal documents and requirements before launching your salon.


You are expected to pay around $1,000 for these services.


a. Permits and licenses


There are several licenses required to run your hair business that it may cost vary depends on the type and size of the salon.

  • Article Of Organization

  • Certificate Of Occupancy

  • Sales tax

  • Federal income tax ID

  • Liability insurance policy

b. Insurances


Insurances are a legal necessity that will protect your business. Make sure you are covered properly on the new adventure, so you’ll have to account for it in the budget.


Insurances are typically calculated in annual premiums, though you may be able to split the payments by month. You’re looking at $500 to $700 per year on average insurance for a salon.


There are five main types of business insurance

  • General Insurance

  • Health Insurance

  • Liability Insurance

  • Workers’ Compensation

  • Products Insurance


c. Certifications

You should have this covered.


You should have business owner licenses such as management certificates or degrees and professional certificates in the field. Your staffs and stylists must hold a state cosmetology license (or have been enrolled in a beautician program or course).


You have to pay around $4,000 for these documents.


The costs of obtaining certifications or licenses will vary between specialties and between areas of your hair salon location.


3. Products Supplies


Use specialty products for use on the client for services. Costs will vary by brands but make sure you consider shampoos, coloring stations, conditioners, and other hair treatment products.


Supplies you need typically cost from $20,000 to $27,000 in total.


4. Inventory Stocking


If you plan to have a retail portion besides offering in-salon services, you’ll need to stock an initial inventory of hair care products and to get everything ready to be sold to your customers.


The estimated cost for inventory stocking is about $ 4,000, depend on the size of the retail display portion of your salon or the brand products.

This should be adjusted as you move forward in your venture, driven by customer demand.


5. Promotion & Marketing


As you establish your new business, a thing that you do not want to neglect is the promotion and marketing plan of your new business to make people aware of your existence.


Promotions and marketing activities can include email marketing, direct mail, yellow pages, radio or TV advertising, flyers in the mail or left on cars.


Besides, creating a website for your new salon that informs potential clients about your products and services is also important. Make sure that you post your business hours, directions to the salon location, your products and services, and a cyber tour of your well-decorated new business.


Promotions prices can vary and range from a couple of dollars for the flyers to hand out up to $15,000 for the television spots. The budget for promotion and marketing should at least consist of two to five percent of your total sales.


These expenditures of this money investment can lead to the infusion of cash you will require over the next several months as you build up the business.


6. Human Resources


a. Staff uniforms


Your hair salon will be more professional if you have uniforms for your staffs and stylists. This cost is entirely up to you.


You may generally want some uniformity across staff wardrobe, but a dress code is a low-cost alternative to costly professional uniforms.


b. Wages/ salaries

Depending on the model and the size of your new salon business, you may need to hire additional salon personnel such as hair stylists, salon assistants, a receptionist and have to pay a salary to each of them.

This cost will range according to your employee payment structure.


Your compensation model will determine how much money you need to set aside to be able to pay your employees until your new business is making a profit. Also keep in mind that you, the owner, should be taking a salary too.


Common Mistakes In Evaluating The Expense When Opening A Hair Salon


1. Explicating the funding need and budget inadequately


When deciding the business model and size to estimate your budget, you should ask yourself the following questions:

  • Which milestones do I want to achieve and when?

  • What activities do I need to undertake in order to arrive at these milestones?

  • What are the costs of executing on these activities?

Only when answering all these questions are you able to compose a break-down of the investment need, to clarify what you aim to achieve with the respective funds and to explain when you reach your milestones.


2. Technology expenses are left out


Modern businesses need to take full advantage of today’s computer resources. Technology support is important as it can help save your resources and make more value at the same time.


Although there are dozens of free software on the market, they can not provide you the advanced features and the opportunity costs should also be taken into consideration. Therefore, free and paid-off software both have pros and cons, and your decision is up to you.


3. The business plan is not aligned with the target market size


Estimating the size of the market and targeted market share is the most important part when opening a hair salon business because it affects nearly all the cost you have to cover.


As a hair salon owner, you can follow the TAM/SAM/SOM model to understand your business. TAM (total available market) represents the total worldwide market without considering the niche market you are targeting with your product or service. SAM (serviceable available market) provides you with information on the market considering your geographical reach, your type of product or service and (niche) clients. SOM (serviceable obtainable market) is the percentage of SAM which you estimate you can acquire as market share within a reasonable time frame.


Fulfill that information in your business plan and let them guide you to the exact amount of capital you need for launching a brand new hair business.


Which Solution Could Help You To Cut Down Costs?


Thousand of salon owners are saving a lot of time and money down the line by investing in a good solution that will help manage appointment bookings, POS, and accounting.


What is a POS system?

POS system is a point-of-sale tool that can handle the daily tasks of your salon such as appointment booking, staff management, inventory management, marketing and report checking automatically.


In general, making the customers get the best of their experience is the final goal of service industry. That’s what POS system can assist, it will keep track of your customers that you can improve your services and grow your business.


BePOS - Reliable POS system that saves 60% expense on running a hair salon


When considering the salon software among dozens, the price range is the first factor that affects the making decision process. However, the value based on the features of the software and its potential is also important.


bePOS is all-in-one software which provides users a wide range of package price and you can easily find the best suit for you. bePOS can boost your business growth up to a 30% rise in sales per year.


Price: 3 packages:

  • Free package: $0/ month

  • Growth package: $29/ month

  • Professional package: $59/ month

Depending on your needs and requirements on salon software, if your budget does not allow you to purchase a full paid-off package, you can still choose the free package with the most essential features and update whenever you want.


For more information, please click here!


Conclusion


We hope you found this article helpful. Please share with us your thoughts, questions, or your own experience in the comment box below.


And don’t forget to check out our related posts:


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>> How To Open A Hair Salon

>> Essential Requirements Needed To Open A Hair Salon

>> 35 Hair Salon Products

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