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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Updated on May 17, 2023
Investment range
$12,050 - $59,100
Revenue potential
$280,000 - $1,125,000 p.a.
Time to build
1 – 3 months
Profit potential
$55,000 - $225,000 p.a.
Industry trend
Growing
Commitment
Full-time
Hair is often the first thing people notice about each other, which is why so many people pay regular visits to their favorite salon or barbershop. Hair styling is a $46 billion industry in the US alone, and even Amazon is getting in on the action. If you’re good with hair and have a strong sense of style, you could open your own salon and cut your way into the market.
Hair skills alone won’t do the trick — you’ll also need business expertise. Fortunately, this step-by-step guide contains all the knowledge you’ll need to be a savvy entrepreneur, ready to cut and style your way to salon success.
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Opening a hair salon has pros and cons to consider before deciding if it’s the right path for you.
Trends in the hair salon industry include:
Challenges in the hair salon industry include:
You can start a mobile hair salon for about $12,000. Costs include your equipment, a down payment on a van, and van modifications. To open a physical salon, you’ll spend $60,000 or more to rent a space, prepare the space, and buy all the chairs and equipment.
All US states require barbers and hairstylists to be licensed cosmetologists, certified by a state-approved program. If you’re not already licensed, you can train in about a year for about $15,000.
You’ll need a handful of items to successfully launch your hair salon, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Shop rental deposit | $0 - $5,000 | $2,500 |
| Space preparation | $0 - $20,000 | $10,000 |
| Chairs, shampoo bowls, other equipment and supplies | $5,000 - $30,000 | $17,500 |
| Van for mobile salon - down payment | $2,500 - $0 | $1,250 |
| Van modifications | $3,000 - $0 | $1,500 |
| Total | $12,050 - $59,100 | $35,575 |
The average salon hair cut costs $45, and the average color treatment costs about $75. Profit margins for hair salons after rent, overhead, and labor are about 20%.
In your first year or two, if you have 5 chairs, the average customer spends $60, and you have 15 customers a day 6 days per week, you’ll be bringing in $280,000 in annual revenue. This would mean more than $55,000 in profit, assuming that 20% margin. As your brand gains recognition and you begin to get repeat customers and referrals, you could expand to 10 chairs and have 60 customers per day. With annual revenue of $1,125,000, you’d make a tidy profit of $225,000.
There are a few barriers to entry for a hair salon business. Your biggest challenges will be:
Now that you know what’s involved in starting a hair salon, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research hair salons in your area (large chain salons, independent salons, and mobile or home-based hairdressers) to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a hair salon that serves wine.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as hair coloring.
This could jumpstart your word-of-mouth marketing and attract clients right away.
Your services don’t have to be limited to just haircuts and color. You could also offer:
The average price for a salon cut is $45, and a color treatment is $75. Your ongoing costs will be for rent, overhead, and labor. You should aim for a profit margin of 20%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
You can open a woman’s salon or a unisex salon. Either way, your target market will be broad. You should spread out your marketing to include TikTok, Instagram, and Facebook. Make sure to post pictures of the great hair styles that leave your salon!
When selecting a location for your hair salon, consider the demographics of your target market. Look for areas where your ideal customers reside or work, such as residential neighborhoods or commercial districts with a high concentration of office buildings. This will increase the chances of attracting clients who are conveniently located nearby and are more likely to choose your salon for their hair care needs.
Visibility is key in the hair salon industry. Opt for a location with good visibility, preferably on a busy street or in a high-traffic area. A salon that is easily noticeable from the street can catch the attention of potential clients and entice them to step inside. Additionally, choose a location with ample parking or easy access to public transportation to make it convenient for clients to visit your salon.
You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices. When choosing a commercial space, you may want to follow these rules of thumb:
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to hair salons.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your hair salon will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a hair salon business. You might also try crowdfunding if you have an innovative concept.
Starting a hair salon business requires obtaining a number of licenses and permits from local, state, and federal governments.
You don’t need a specific hair salon license, but you do need to be a licensed cosmetologist in your state. State requirements vary.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your hair salon business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as SalonBiz, Rosy, or schedul, to manage your online bookings, appointment calendar, inventory of products, and payments.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Some of your business will come from the casual passerby or online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your hair salon meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your hair salon business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a hair salon business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in hair salons for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in hair salons. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a hair salon business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
If Amazon is getting into the hair salon business, you know there’s money to be made in the industry, which is worth $46 billion in the US alone. If you’re a master hair stylist, you could get a piece of that market with your own hair salon.
It takes an investment to start, but you can earn an excellent return on that investment, and eventually grow to have a whole chain of hair salons. You’re a business expert now, so style your plans and get ready to launch your new hair salon empire!
Hair salons can be extremely profitable. The average salon haircut costs $45, and color treatments cost $75. The profit margin for a hair salon is strong, generally around 20%.
A typical hair salon needs a General Liability Insurance, Commercial Property Insurance, Professional Liability Insurance, and Workers Compensation Insurance.
Yes, you are required to have a cosmetology license to open and run a hair salon in all states.
To make your salon successful, focus on providing exceptional customer service, offering high-quality and trendy hair services, hiring skilled and well-trained staff, maintaining a clean and inviting environment, implementing effective marketing and promotion strategies, and creating loyalty programs or special offers to attract and retain clients.
Yes, you can offer additional services such as nail care or spa treatments in your hair salon. This can enhance the customer experience, provide convenience, and attract a wider range of clients. However, make sure to consider the space, resources, and licensing requirements for offering these additional services.
Develop an online presence through a professional website and active social media profiles to showcase your salon, services, and client transformations. Engage with your audience, share valuable content, and respond to inquiries promptly. Utilize online directories and platforms specifically for beauty and salon services.
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