Operating Costs of Opening a Hair Salon

When you open a salon, you’ll have initial costs to look out for to operate. These are usually legally required. Every state has different laws and costs, so make sure you research what affects you locally.

• Cosmetology Licensing. Make sure your cosmetology license is up to date and in good standing! You can’t legally open a salon without it, and it’ll be important to make sure all your stylists comply as well. It only costs around $50 depending on the state you live in. 
  
  
• Permits. Retail permits for selling products, business licensing, building permits for renovations, a certificate of occupancy, and a few other things may be required depending on your state to legally operate. Each of these can cost around $15 - $250 and some may require an application before you’re approved. Overall the cost will be around $500 - $750 total. 
  
  
• Website. These days it’s incredibly important to have a website that’s easy to navigate for booking and information! Being able to book on your website streamlines the process for clients and gives them an easy experience. You can have a website specially built for you for around $500 and up, or you can use website creators for around $30/month.

Salon Monthly Expenses to Know About

Other than basic things like the electric bill, there are some things you’ll have to spend money on each month. Make sure you consider these costs when budgeting for your salon.

• Insurance. For the safety of your stylists, you’ll be required by law in many states to pay insurance each month for each employee. This is in case anyone slips and falls, gets chemical burns, or is injured for any reason as a result of their job. You should also consider insurance for the salon itself. We never want these things to happen, but life is unpredictable! This can cost anywhere from $300 to $1500 annually depending on the number of people you have working for you. In many cases, this is split into a monthly payment.
  
  
• Payroll. Depending on how your stylists get paid, this is incredibly important. Make sure you have a consistent schedule to pay your stylists. If you don’t pay them on time, not only will you lose your best stylists, it can cause you legal trouble! 
  
• Restock. You’ll need to restock your supplies each month depending on how busy you are. This includes color, shampoo, and even toilet paper. Itemize everything you use monthly, it’ll make your life easier! This can cost anywhere from $300 to $800.
  
  
• Advertising. Websites like Facebook will charge you per click, and they’ll work with any budget. You can set a daily maximum for how much money you’d like to spend per click so you never go over your budget! You can spend as much as you want here, but a budget of around $150/month would be reasonable for this. 

New Salon Opening Tips

We’ve covered most of your bases for building your salon, now it’s time to open it! It’s a great idea to have some fanfare when you initially open to get the attention of the community and let potential new clients you’re here. You get the opportunity to show off everything you’ve worked so hard to create and start your new life as a salon owner, and that’s cause for celebration. 

• Media. Reach out to the local news or your local Facebook groups to let everyone know you’re here and ready for business! It’s free to spread the word, let as many people know as you can think of that you’re the proud owner of a brand-new salon. 
  
  
• Gifts! Enticing people to stop by with gifts and promotional coupons can get business flowing and people interested. Who doesn’t like free stuff? You can include samples of shampoos and conditioners (especially ones you’re selling in retail!), nail polish, and hair ties. Think of the clients you want to bring in and buy accordingly. A good budget would be around $200. 
  
  
• Refreshments. Charcuterie boards, lemon water, coffee, and anything simple will work well. Wine should be at your discretion, as that may turn some people off. A budget of around $100 - $300 would be reasonable for this.

Ways to Cut Costs When Opening a Hair Salon

Now that we’ve gone over what to budget for your hair salon, here are some tips to save some money. Opening and running any business can be tough financially, so the more money you can save the better. 

• Buy Used. Buying used items in good condition is a great way to cut costs. You can save hundreds of dollars buying pre-owned items from wholesalers or other salons. Keep an eye out on websites like Craigslist or Facebook Marketplace. 
  
  
• Negotiate. If you’re looking to rent a space, you can negotiate your lease terms! Consider spending a few hundred dollars to hire someone to help you negotiate your rent, it will save you thousands in the long run. 
  
  
• Efficiency. Not only is learning how to save water and electricity good for the environment, but it’s also good for your wallet! You can change showerheads to water-efficient ones, or see if you’re able to recycle water waste for your toilets. Being on top of your plumbing and general maintenance keeps everything working the way it’s supposed to for the long haul too. 

Is Owning a Hair Salon Profitable? 

This is the big question – is it worth it to go through all this trouble? Owning a salon is no joke, it takes guts to put your money up and start a business. 

• Profit Margins. After all is said and done, hair salons make around an 8% profit margin on average. With great management skills, you could make it up to 11 - 12%! The hair industry is on the rise right now with more and more people going to the salon, so this could increase naturally over time. 
  
  
• Pay. We haven’t talked about how much money you would be making yet. The national average is somewhere around $55,000 to $70,000 annually, but don’t let that number limit you. Some owners take home around six figures each year! It’s dependent on your location, experience, and clientele. Don’t expect to make that much in your first year of opening.