How to Start a Hair Salon Business Now in 2021 (Comprehensive Guide)

Starting a Hair Salon Business Today

Table of Contents

Starting a hair salon business is both exciting and scary. It’s exciting to finally have the opportunity to pursue your dream of owning a hair salon where you can share your knowledge and skills with others. At the same time, it can be daunting when faced with all of the decisions that need to be made to start your own salon in order for your hair salon business to thrive.

This article will provide you with a comprehensive guide on how to start a hair salon business from creating a plan, establishing a budget, financing your new venture, deciding how you want structure your company, getting appropriate insurance coverage, marketing and advertising. We explain how to find success as an owner/operator or partner in the best way possible!

Start a Hair Salon Business

Start a Hair Salon Business Plan

 What Should a Hair Salon Business Plan Include?

This is one of the first questions you will need to ask yourself as you begin this process. A typical hair salon business plan includes how much money your new salon needs, how that money will be spent and how it can be acquired.

You may want to include information about how many employees are needed for day-to-day operations, what supplies are necessary, how long it would take for profits to break even or cash flow positive and any other important aspects related to starting a successful hair salon business.

One helpful thing when creating your own hair salon business plan is going through a sample template so that you know what key points must be included. There are also websites available which allow users access to complete hair salon business plan templates.

Why do You Need a Beauty Salon Business Plan?

A hair salon business plan is a roadmap that guides how you will start, run and grow your new company. A well-made plan can help you to avoid common pitfalls of starting a hair salon like spending too much money or hiring the wrong people for key positions in your organization.

Make Sure You Have the Necessary Funds To Start a Hair Salon Business

This may seem obvious but it’s important when thinking about how to start a hair salon. The general rule is that whatever amount of funds need to be raised should equal around six months worth of income from projected sales figures. What this means is if your projections show an average monthly revenue stream of $20,000 then you’ll want at least $120,000 deposited into savings before launching

Establish a Hair Salon Business Start-up Budget

 How to Create a Hair Salon Budget

The first step is determining how much capital you need to fund the opening phase of your hair salon business. This includes rental space; professional equipment such as styling stations, chairs or sinks; consumables like towels or shampoo; and the initial outlay for inventory.

Once you have determined how much capital is needed, determine how it can best be financed. This includes using savings or other assets that could generate income (such as an investment account), crowdfunding through Kiva lenders, credit cards with favorable interest rates, debt financing such as small business loans from a bank or peer-to-peer loan sites like Lending Club or Prosper Marketplace.

Create an outline of how much revenue is predicted for each month during the first year in operation and how those monthly projections would compare to initial expenditures needed over that same time period (i.e., rent/mortgage payment). The difference between revenues and expenditures should show a profit at the end of one year.

Find a way to Finance your Hair Salon

To be successful in business, you need to be prepared and informed with your loan options.  Here are some of your options for financing your startup costs for opening a hair salon business:

  • SBA or Small Business Administration Financing for Hair Salons
  • You Can Ask Friends and Family to Invest in Your Hair Salon
  • Use Credit Cards for Short Term Financial Help – Credit cards can help you when you are in a financial crisis. They provide cash quickly and easily. But, you must pay the credit card back as soon as you get more money to make this option work best.
  • Get a bank business loan for your hair salon.

What if you Have No Money?

How to Open a Hair Salon with No Money

To open a salon on the cheap, one should create a detailed business plan before making any investments into equipment and take precautions against losing money through operating expenses.

One of the most important factors to consider is how much you’re willing to spend on startup costs. This includes borrowing salon equipment, self-funding, getting venture capital from investors, or applying for an SBA backed loan.

Establish Credit for Your Hair Salon Business

Open a business bank account & credit card.

When you establish your credit, it will help your hair salon business to get approved for a loan or line of credit. You can also apply for trade lines with suppliers and other vendors because they may trust how much money is going into the company!

As a hair salon owner, it is possible to get credit for your business.

First, you will need to determine how much you want to borrow. When you establish your credit with the bank or lender, they will give you an idea of how much capital is needed for your company. Have collateral ready! Lenders may require a personal guarantee to offer credit.

Find a Good Hair Salon Location

Choosing the right location for your hair salon will be a huge factor in how successful it is. Consider where most of your clients live and work to determine how convenient it would be for them to visit you on a regular basis. If they are across town from you, they probably won’t patronize your business regularly.

Design Your Hair Salon Layout

In order to make your hair salon layout as efficient and profitable as possible, you’ll need to take into account how the space will be used. For example:

  • Will employees serve customers from behind a counter or at walk up stations?
  • Is there room for an island station in between shampoo chairs? Should this area double as a makeup station?
  • How should shampoo chairs be arranged to maximize efficiency and how many stations will you need in order to accommodate the number of stylists on staff?
  • Will there be room for an area where hair products are displayed or sold, such as at a salon reception desk or counter near the front entrance? Can it double as a space for styling or at-home hair care demonstrations?

You’ll also need to consider how the salon layout will affect your ability to maintain an organized and efficient work flow.  For example:

  • Will you be able to clean up quickly after shampooing clients in one area, while stylists are still working on customers in another area?
  • Will you be able to use one station for drying and styling while other stations are being used for hair washing or cutting, in order to avoid bottlenecks during peak hours? Is there room near the front entrance of your salon where stylists can set up their own chair so they don’t have to walk too far to get back to the shampoo section of your salon layout?
  • Will there be enough room for an office, storage space and a changing area near the front entrance of your hair salon business or in another out-of-the way location?
  • Can you find stylists who will agree on how best to lay out their stations so they can work as efficiently and profitably as possible?

Finally, how the hair salon layout is designed will be different for salons that offer only services such as haircuts, shampooing and blow-outs versus those with a full range of beauty or hair care products.  For example:

  • Will you have enough room so your stylists can offer both hair care services and sell products?
  • Do you have room near each shampoo station so that employees can also sell haircare product samples, such as a range of shampoos and conditioners from different brands or a few hair products such as styling gels, hairsprays and mousse?
  • Should your salon layout include a space where customers can view the latest makeup trends or colors on mannequins before having their makeover right there in the salon chair, for example by mounting up to four tables next to each other so that two stylists can work on customers at the same time?

These are all the things you need to think about and questions to ask when designing your hair salon layout.

Design Ideas for Small Hair Salons

Often, if you are just starting out, you will have a smaller sized hair salon that you will eventually grow. Here are some tips on how to best design your space for a smaller hair salon.

 Hair Salon Reception Area Design & Layout

What is the purpose of your hair salon reception area? Is it to provide a waiting area for clients, or an opportunity for customers who may not be ready to get their haircut at that moment to browse through magazines and enjoy some coffee? Whatever you choose, make sure there are clear indications

 Hair Styling Station Area Layout

What do you need in a hair styling station for your stylists to be as productive and happy as possible? The answer is not so simple, but there are some common features found among successful salon owners.  Study your competitors and implement your own solution to the styling station area layout.

 Hair Salon Backwash Area Design

What is the most important thing for your hair salon backwash area? Is it how many shampoo bowls you have, or how relaxing and serene of an environment it is?  You must make sure to include enough sinks at various heights and in different shapes and sizes.

Hair Salon Business EquipmentHair Salon Equipment and Tools

You will need equipment like chairs, counters and mirrors.   You’ll also need things like hair dryers, shampoo bowls and towel racks.

By far the most expensive equipment you’ll need is going to be your furniture and fixtures.

Look for used equipment or find discounted pricing by shopping at a beauty supply store rather than buying new.

If you are willing to search locally on Craigslist or ask friends who live in other cities, you may be able to find some nicer salon furniture that is cheaper because it’s not in demand.

Protect Your Equipment & Tools with the Proper Insurance

Protect your equipment and tools with the proper lability insurance. When you buy or rent salon furniture, be sure to get a policy that includes all of your business’ furnishings so you can replace them quickly if necessary.

You should also cover expensive hair dryers and other electrical appliances because they are prone to malfunctioning due to how much they are used.

This would be a good time to research general liability insurance options for your equipment and tools.

Decide on your Hair Salon’s Legal Business Structure

If you start a new business, you have to decide which type of company to make. You can choose from five types of business structures: Sole Proprietorship, Partnership, Limited Liability Company, S Corporation, or C Corporation.

An LLC business legal structure setup for example protects you from being sued personally. It is flexible and offers more flexibility for taxes.

No matter what business structure you choose, check out these different business formation services that can help you put your legal business structure in place.

Register Your New Hair Salon Business

 Obtain required hair salon business licenses and permits

You will also need to register your new hair salon business with the state. Check out how you can do this online, via mail, or in person.

In some states (such as California), it is necessary to obtain a separate permit for each different kind of service that you offer at your hair salon. If you want to open a hair salon in California, for example, you will need a cosmetology license.

In states like New York, the requirements are more straightforward. The state requires a license for hairstylists and barbers (as well as hair salon owners).

Set up business accounting for your Hair Salon Business

Accounting for your hair salon business includes keeping records of your customer invoices and ensuring that you are charging customers fairly.

You must ensure that invoices are accurate and to the penny. This is not an opportunity for overcharging or rounding up to a higher price than what was actually charged. It’s also important to ensure validity of any sales tax deductions or how to handle the payment of taxes.

Managing cash in accordance with accounting principles

Ensuring that your business’s bank account is properly set up and reconciled on a regular basis. Bank reconciliations are important for any company, but hair salon businesses need them more often because they deal in such high volumes of cash transactions.

Protect yourself and your employees with the right insurance

Not only do you need to protect your business and tools with the right insurance but you need to protect yourself and your employees.

Get educated on what types of insurance policies you will need as far as hair salon insurance goes.  There’s general liability insurance, professional liability insurance, product liability insurance and many other types of commercial insurances to consider.

Don’t forget how important it is to have worker’s compensation insurance on your employees.  Hire a commercial insurance specialist who can help you get the right coverage for your hair salon and provide peace of mind that everything will be protected should something go wrong.

Day to Day Operations of Your Hair Salon

 Get a Good Salon Software

Trial Versum Salon Software for Free

Versum Salon Software is an easy-to-use, powerful salon management software for hair salons. It lets you manage your appointment schedule and online booking, send out newsletters to clients, track inventory, create invoices and purchase orders with ease.

There’s also Salon Iris software to check out. Salon Iris is another choice for hair salon software that can be used. It’s web-based so you don’t need to download it and store it locally.

A third choice to investigate is Booker’s hair salon software which takes care of your booking, billing, payment, management. It has a user-friendly interface for you and your clients.

Marketing & Advertising

Now it’s time to create your salon marketing plan for your salon brand and offer something that is not offered by your competitors.  Differentiate yourself from the pack.

Start with a catchy slogan or catchphrase for your salon and then build on it to come up with an effective name, logo design, advertising taglines and other marketing materials.

Be thoughtful how you will advertise your new hair salon business – where to advertise, how to create an online marketing strategy and how you will utilize social media.

Consider creating a video that highlights the services your hair salon business offers. It might be beneficial to use this in ads as well as on Youtube or other video platforms.

 Come up with a Good Name for your New Hair Salon

You’ll want a name that’s catchy, original and memorable.

Think about how your salon will be different from what is already out there in the marketplace. Use words to differentiate yourself–make it unique!

Some hair salons might use their owner’s names as part of their brand: Sylvia’s Salon. Others might choose to have a theme–like Hair by the Sea.

Consider how your name will look on signs and how it sounds in people’s mouths!

Don’t use words or names that are trademarked, copyrighted or subject to any other legal claim.

If you’re not original enough to come up with a good salon name, there are plenty of naming services that will help you out. Peruse over 2700 salon names here: https://thesalonbusiness.com/salon-names/

 Find an Available Website Domain Name

Find an available website domain name for your hair salon business.  The best way to approach finding one that is appropriate is to brainstorm ideas and create possible lists of names, then go through them alphabetically or search the listings in order to narrow down your choices.

After you have selected a domain name, go to Godaddy or NameCheap to register your domain.

Have more than one option available in case your first choice is already taken.

A good Logo is one way your customers identify with your business, and it will be a mark of your own personal style.

The logo can be in any shape. There are many online programs that enable you to create logos for free or at minimal cost. One such program is called Logomakr.

Logomakr offers a free and simple interface to create logos using shapes, fonts and colors

Your hair salon will have its own unique identity by choosing which font or shape you want for your business name. It’s wise to keep it simple and consistent to help with brand recognition.

 Create a Hair Salon Service Menu

Hair salon service menu is a list of services you provide to your customers.

A hair salon service includes haircut, blow dry or style and other services such as color/highlights, perm and retail products like shampoos, conditioners etc.

Create the hair salon service menu by listing all the available options for your clients to choose from.

Include the prices in your hair salon service menu as well, to avoid misunderstanding and confusion with customers.

Pricing Your Services

Wondering what your hair salon services prices should be?  Well a typical cut can cost anywhere from $25-$75.  A typical color can cost from $150 to over $600.

The more expensive the service, the higher the price tag should be.  However, hair salon prices depend on how much experience you have and how long you want your customer to wait for their appointment (cut versus style).

Something else to think about with pricing is should you have different pricing for walk in customers vs. people who book appointments ahead of time? Why or why not?

Hair Salon Business Services

 Define who your Ideal Salon Client Is

Take a look at the qualities of good clients before opening your hair salon.

One of the most important decisions you make as an owner is who will be allowed in your salon. When selecting customers, think about what type of clientele you want to attract and whether it meshes with the makeup of your area.

Choosing which clientele you cater to will influence your business model.

Being aware of your target market is a vital consideration when determining the overall salon vision.

Study Your Competition

Make sure to research how other salons are marketing themselves and what their prices are so you can stand out.

If you find a salon that does something really well, go to their social media and see how they market themselves.

It’s not about trying to change your pricing or copying how other salons do things – it is about finding what sets you apart from the rest of the pack while still appealing to clients.

 Develop a Hair Salon Website

A hair salon website is one of the most important marketing tools for a new business. It’s how potential customers will find you online and get to know your salon before they ever walk through the door in person.

 Create an Email List

A hair salon website should include a “newsletter” or “email list sign-up” form in order to build your email subscriber list. This is how you will stay connected with potential and current customers, sharing new promotions, products, services and more directly to their inboxes each time it’s updated!

 Setup your Hair Salon’s Social Media Accounts

Don’t forget what the kids are using these days! You should also get on social media platforms for your hair salon on Facebook, Twitter and Instagram to get instant customer feedback.

Use this information to improve how you communicate with them through social networking channels (what they want from your business) as well as other marketing strategies like SEO or search engine optimization.

 Get Business Cards and Printed Marketing Material for your Hair Salon

Designate marketing materials like business cards, flyers and brochures with your logo so that you can give them to people who come in contact with your business. This is how they’ll remember how great it was when they visited your salon!

Grow and Scale Your Hair Salon

Hair Salons grow when they are getting more customers, selling more services per visit, adding other services, and making money in other ways. Each of these things can be achieved through the right strategy and focus.

Grow the business by hiring more stylists, giving them shift work or share scheduling so hair stylists have time to grow their skills. Invest in training for current staff as well – how new products are used, how social media is beneficial etc.

Frequently Asked Questions

What Licenses do I Need to Open a Salon?

A hair salon business needs to have a cosmetologist’s license. You can contact your Department of Professions and Occupations for more information on how to get this done, what qualifications you need, and how long it will take.

How much investment is required to open a hair salon?

The minimum capital needed varies depending on how much equipment or inventory you will need. You should also consider how much money you will spend on start up costs such as rent, advertisements and liability insurance.

Starting up a salon business can take place in many ways. Some stylists buy out their current salon, while others start from the ground-up by renting space and buying equipment. One of the most important steps is to find necessary licenses for your state and make sure your salon is properly insured.

Be sure to include marketing, advertising and social media into your budget because they are crucial aspects of any modern business.

 Is a hair salon a profitable business?

A hair salon should be a highly profitable business because the overhead costs are usually low and you can get away with higher margins for your products. In order to make sure that this is true, create a financial forecast early on in the process. This will help you understand how much money needs to come into your business every day so that it remains profitable.

 How do I get funding to open a hair salon?

One of the best ways to get funding for your hair salon business is through a traditional bank loan.

 How much money do hair salon owners make?

The average hair salon owner can expect to make a median income of $44,000 per year. The top 25% of salon owners earn more than $68,600 annually, some making upwards of $120,000 and the bottom 25% earns less than $30,400 each year.

 Is buying a hair salon a good investment?

Hair salon businesses can be a good choice for those who want to make money on the side and are willing to work hard. Prices of hair salons vary greatly, so how much you pay will depend on where you live in relation to potential competition.

With all the information you’ve learned today, it is time to take action. The first step in any successful business venture is research and planning. Research this site for other resources that will help you start up your own hair salon business.

From figuring out how much money you need, to what equipment and tools are needed, we have covered everything here for a budding entrepreneur like yourself who wants to open their own hair salon – even with no money or credit.

We’ve also included tips on finding the perfect location near potential customers and designing ideas for small salons too. If you’re new at starting businesses then don’t worry because we have articles about legal structures of different types of businesses from a sole proprietorship (where one person owns the company) to S-corporations and how they affect your taxes.

Now it’s time to take more action and read the additional resources available on our site which can help guide you in different step along the way of opening your very own business.

Author

  • ChrisDarling2021 rotated

    Chris is a busy mom of two, who loves to tinker with computers and read in her free time. Her knowledge of what it takes to start up a business especially businesses that operate on the internet has helped many people from around the world. Many of the tools, resources and solutions found on this site are the same things that she uses to run her businesses. Chris often shares her experience as an online entrepreneur and business coach, speaking at events all over about how she created multiple successful businesses and profitable websites. She also offers advice on how people can build their own business website or blog for very little money, while still maintaining quality content.