How to Start a Hair Salon

Written by Dave Lavinsky

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The best way to start your hair salon business is by considering the customer. What do they want? What are their needs and wants? You need to know this before opening up your shop so you can be sure that you have exactly what they’re looking for. This article will talk about how to get started on your own salon and the keys to making it a success.

Importantly, a critical step in starting a salon business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Salon Business Plan Template here.

How to Open a Hair Salon

Use the following hair salon checklist to help you get started:

  1. Conduct Market Research
    • Find competitors and examine their strengths and weaknesses
    • Review how people in your area feel about local hair salons
    • Determine if the desired business is profitable in the area you plan to set up shop
    • Talk to other small business owners in the area to get insights into the demographics and behaviors of your target market
  2. Write a Hair Salon Business Plan
    • Use statistics and research from surveys or studies to support claims
    • Include an executive summary people can see at-a-glance
    • Use specific details explaining all of your services and each of their price points
    • Include how much money is needed for start-up and/or unexpected costs
  3. Location, Location, Location
    • Select a location for your new business that is easily accessible, visible, and nearby
    • Make sure you have enough parking spaces to accommodate customers
    • Choose an area with little crime so customers feel safe during business hours
    • Determine how much it would cost to run the business based on gas, electricity, rent, etc.
  4. Staffing and Supplies
    • Choose people who are competent, licensed, and knowledgeable to work in your salon
    • Ensure you have the basic supplies needed to run the hair salon, such as hair dye, shampoo, scissors, combs, sterilizing solution, etc.
    • Establish how many staff members would be necessary to meet demand before opening day
  5. Marketing Plan
    • Determine how you want people to hear about your business
    • Will you have flyers, a website, or use social media platforms?
    • Think of the advertising options available in the area and choose which ones would work best for your own business
    • Create a budget for advertising expenses
  6. Earnings and Salon Expenses
    • Examine the costs you will incur during business hours
    • Figure out how much money you’ll need to bring in every month after expenses, salaries, and other costs
    • Research what your competitors offer and see if there is room for improvement or an untapped niche that needs work
    • Create a breakdown of estimated costs for each item on your menu so customers know exactly how much they’ll be spending on their visit
  7. Taxes, Licenses, and Regulations
    • Find out if you need an occupancy permit or other forms of documentation
    • Find out how much taxes you’ll have to pay and what you can claim as a business expense
    • Inquire about any other regulations that your hair salon will have to follow in your local area
    • Determine how you will follow up on these regulations to make sure your business is following the law
  8. Launch Your Hair Salon Business
    • Give yourself a deadline for completing these tasks and stick to it
    • Build business relationships with local businesses, friends, and family members
    • Plan a launch event to get the word out about your business
    • Inform your employees of their roles in the company before your opening day

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

How Big is the Hair Salon Industry?

The hair industry is currently worth $39.5 billion and is expected to grow at a 28.7% rate in the next year.

What are the Key Segments of the Hair Salon Market?

There are several segments within the hair salon market, some of them include:

Affordable Hair Salons

This group of customers typically likes the convenience and affordability of the local hair salon. These clients are not necessarily looking for top-of-the-line service but they want quality care at an affordable price.

Corporate Hair Salons

This sector of the market caters to working professionals who need haircuts on the go. These clients are typically busy and they do not have time to shop around for haircare services. Because of this, it is important for these hair salons to offer quality haircuts with efficiency.

Cosmetology Schools

Cosmetology schools will often offer haircut services to the local market at a discounted rate. The catch is that they are looking to train future cosmetologists, therefore the haircuts are typically basic. This segment of the hair salon market offers budget-friendly haircuts but with lower standards.

Specialty Hair Salons

Specialty hair salons focus on specific hair services like hair extensions, nail care, and other niche hair care ideas. These salons provide a wide range of services but they typically require more training and education.

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What External Factors Affect the Hair Industry?

The economy affects how much people are willing to spend on their haircuts.

Haircuts may be seen as a luxury due to the price fluctuating with the economy.

During an economic downturn, prices tend to increase at many salons because it’s seen as a way for many salon owners to make up for lost profits if people aren’t spending much money on themselves.

When disposable income is higher, more people are able to go out and get their haircut or color which can lead to an increased number of customers.


Who are the Key Competitors in the Hair Salon Industry?

One of the first things you should consider is what other businesses are competing for your target customers’ attention. Your local yellow pages provide an extensive list of the current salons in your area, as well as their addresses, phone numbers, and hours of operation. Take note of the types of services they offer, the price ranges, and their customer reviews.

National hair salons such as SuperCuts, Regis, and Great Clips are also considered key competitors in some areas. You might even consider contacting some of these larger chains to see if they will allow you to lease space inside their salon so you can operate your salon business alongside them.


What are the Key Customer Segments in the Hair Salon Market?

There are several customer segments within the hair salon market, some of the most important include:

  • Affluent Middle-Aged Women
  • Young Adults on a Budget
  • 55+ Men

When starting a hair salon, it is critical to understand these key customer segments. So how do you go about catering for each of these groups?

Well, affluent middle-aged women are typically looking for top-notch service in an exclusive environment. You will often find that this group prefers upscale salons in larger cities. Therefore, you should consider setting up a shop in a busy, metropolitan area.

Another customer segment is young adults on a budget. These clients may not be able to afford the high-end salon services of the middle-aged ladies but they still want an upscale experience and quality service. Many young adults like stylists who are hip and trendy, but they can’t afford to pay too much for hair services. This is why you should focus on offering affordable hair care options in a chic environment.

Lastly, if you’re thinking about how to open a hair salon, don’t forget the 55+ men. These clients are looking for styling that is natural and classic. They do not want anything too dramatic and they like to keep their hair looking natural.

By catering to these key customer segments, you will increase your chances of being successful.

If you’d like to quickly and easily complete your Hair Salon business plan, download Growthink’s Ultimate Hair Salon Business Plan Template and complete your business plan and financial model in hours.

What are the Typical Startup Costs for a New Hair Salon Business?

The startup costs for a new business vary depending on the physical location and size of the salon. New business owners need to invest in certain salon equipment such as sinks, salon chairs, and hair dryers.

There are also less tangible expenses that salons must bear such as signage and marketing expenses. These can be significant and can make or break a salon’s success.


Is Owning a Hair Salon Profitable?

Yes, owning a hair salon can be profitable if planned well. If you are looking to become stylist or beautician or even open your own hair salon, it is essential to research on whether the business will be profitable enough for your investment. Depending on how busy you intend to schedule the business will determine its profitability. A good business plan ensures that after calculation of expenses and other charges; one can expect a good turnover which will help them recoup their investment.


What are the Keys to Launching a New Hair Salon Business?

The keys to launching a new hair salon business are location, staff, advertising, and customers.


The first thing you’ll need to do is determine where your products and services will be sold. Will it be at a mall or in an area with many shopping centers? You’ll want to make sure that you have enough parking space for your clients because people are less likely to come if they have to go out of their way just to find parking. 


Next, it is important to think about your staff. This includes receptionists and hairstylists. Once you’re ready for business, make sure that all staff follow their schedule. No-shows and late arrivals will only slow down the production and could frustrate customers who have appointments. 


Next, you’ll need to choose how you want to advertise your new business. The market is very competitive so it will be difficult for new businesses to survive if they don’t have a plan of action. 

You’ll want something catchy and unique that the customers will remember the next time they’re looking for a salon. Word-of-mouth advertising can also help if you take every chance you get to promote your shop. 

If someone compliments your work, take that opportunity to tell them about your website or hand out some business cards if necessary. 


Finally, you’ll need to decide on who your customer will be and how you can attract more people. You don’t want a shop full of older women if most of the style preferences are for those under 30 years old. 

It’s also important to think about what your salon is going to specialize in. Do you want it to become an upscale hairdresser catering only to celebrities or do you want it as a cut-rate salon? 

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How to Start a Hair Salon FAQs

If you're looking for a way to get your hands in the beauty industry without much start-up costs, running a hair salon franchise may be the best route for you.

You'll need to have a certain amount of funding in place that would cover your initial cost, cooperative advertising, and cooperative purchasing. Speak with other entrepreneurs who have opened a salon franchise before making any decisions because they can offer plenty of information about their shop, including profitability and tips for success.

The cost to start a salon varies by the size of your business and services provided but typically ranges from $40,000 to $250,000. This includes monthly lease, salon equipment, staff salaries, utilities, and startup licensing fees before you really start seeing a profit. 

Every salon owner needs the proper business license from the local government before they can legally open a hair salon. 

Hairstylists typically require a cosmetology license in order to cut and style hair, while barbers typically need a barber license. You can search for your local regulatory board at the National Board of Cosmetology website.

It is also necessary to have general liability insurance for the safety of customers entering your beauty business. 

Owning a salon can be very profitable. For example, with only one staffed salon that is open 9 hours per day, 6 days per week (for an annual business duration of 360 days), the average gross earnings before taxes are about $389,000. Overhead averages 65% meaning the owner would keep about $69,000 in net profit annually.

The main way to stand out in any part of the beauty industry is first to be unique. This means devising a plan that sets you apart from others, such as providing hair coloring services which other salons may not provide. 

By focusing on what differentiates you from others, potential customers will come flocking to your door since they know that they are getting something no one else has.

Hair and beauty salon owners must be aware of changes within the hairdressing industry. Hairstyles come and go as do colors, cuts, and tools. A hair salon owner must be aware of what is the most popular at the time to stay competitive.

You can download our hair salon business plan PDF template here. This is a business plan template you can use in PDF format.


Additional Resources

4c Hair Chicks

CosmoProf Continuing Education

Salon Geek

How to Start a Successful Hair Salon

Salon Owners Collective


Other Helpful Business Plan Articles & Templates