Beauty salons can be profitable if they are run intelligently, but doing this requires some basic business knowledge. Here is a quick overview of some of the costs involved.
Upfront Costs of a Beauty Salon
A beauty salon with well-known stylists can get away with limited space and just a few chairs. For most start-ups, it is wise to have at least six chairs and stylists.
You can count on needing a minimum of 1,000 square feet of space and spending from $75 to $125 per square foot to build the salon from scratch. Businesses located in an affluent ZIP code with high-end fixtures will cost as much as $300 per square foot in upfront costs.
You will need to pay rent for several months before the shop is operating at its full capacity. Setting up the salon can take up to nine months by the time you purchase all the supplies you need and hire hair washers, administrative staff and stylists.
Employees
After set up, employees will represent the biggest expense. Some salon owners pay their stylists on commissions. Stylists may collect from 35 percent to 60 percent of the business they bring in. Using a graduated scale encourages employees to attract more customers. One model is paying a stylist 40 percent of the first $1,000 of revenue in any given week, plus 5 percent for every $1,000 after that.
Some salon owners adopt the booth rental model. Stylists pay to use the space on a weekly basis. Employees sometimes prefer this model because they receive payment more often than every two weeks.
Support staff will cost approximately 10 percent of total revenue. This is assuming you are paying on commission. The percentage is higher with the booth model.
Expenses
Ongoing expenses include payroll taxes (7.6 percent of sales), supplies (2 percent to 8 percent), marketing (2 percent to 5 percent), insurance (2 percent), maintenance (3 percent) as well as rent and property taxes (3 percent to 10 percent depending on location).
Ongoing training programs for stylists are wise investments if you want to keep up with the latest trends. If you’re seriously considering running a well-operated successful beauty salon, look into Evergreen Beauty College, which has a business program integrated into their cosmetology program.
