Beauty salons have grown in popularity as disposable income has increased. Salons are as much a social institution as they are a tool for consumers to enhance their look. The beauty sector produced $62.46 billion in 2016 alone, and its figures have steadily increased over the last 13 years.
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Follow these ten steps to open a beauty salon:
Make plans for your Beauty Salon
Create a legal entity for your beauty salon.
Fill out a tax registration form for your beauty salon.
Create a Business Bank Account and a Credit Card
Create an accounting system for your beauty salon.
Get the Permits and Licenses You Need for Your Beauty Salon
Purchase Beauty Salon Insurance
Create a Beauty Salon Brand
Make a website for your beauty salon.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. We’ve put up an easy-to-follow guide on opening your own beauty parlour. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses of starting a beauty salon?
Experts suggest that you have at least $60,000 before starting a beauty shop, although this figure is greatly dependant on the cost of real estate in your location and the number of seats you want to have (1,000 square feet will fit about 6 chairs.) Equipment is approximately half the cost of the original capital, or roughly $30,000. The cost of operating licences varies greatly (from $100 to $2,000.)
Advertising expenditures should be considered as well, with television time costing up to $15,000. Due to the prevalence of beauty salons, you may incur significant fees if you opt to employ a pay-per-click approach for digital marketing.
What are the continuing costs of running a beauty salon?
Owners should budget for the following costs:
Salaries
Supplies
Advertising
Replacement of equipment (wear and tear on chairs, dryers, etc.)
Building expenses (e.g., utilities, permits, upgrades)
Who is the intended audience?
Beauty salons will benefit the most from recurring customers. You’re seeking for men and women who are prepared to pay extra for excellent work and who want consistent services on a monthly basis.
How can a beauty shop generate revenue?
Beauty salons earn money by trading money for beautification services. It is critical to determine the appropriate profit margins for your services. For colouring or haircuts, some establishments charge a flat amount. A good starting point is to look at the price structures of other salons in the region and aim towards the middle of the road. Customers certainly have financial constraints, but if the charges are too cheap, they may become dubious of the quality of service.
How much money may you charge your customers?
The actual amount you charge consumers will depend on where you are, who your audience is, and the stylists’ expertise. Celebrities may spend up to $800 on hair services and $200 on nails. However, you should often arrange your stylists on a tier system, with junior stylists costing approximately $30 for a cut, intermediates charging around $40, and masters asking $50 to $60. Manicures and pedicures may range in price from $15 for a basic service to $30 for a deluxe manicure.
What kind of profit can a beauty shop make?
Profits might range from 5% to 15% of overall revenue generated by your salon. You may also supplement your income by selling retail items such as speciality shampoos and conditioners. If you want to generate more money, you’ll need to raise your service rates, but doing so may turn off clients.
How can you increase the profitability of your company?
Seem for approaches to help your consumers look better depending on their requirements. If you have a lot of middle-aged ladies coming in, for example, offer additional therapies to lift and rejuvenate sagging skin. Consider calling in cosmetic professionals on occasion for important occasions (e.g., offer Brazilian hair straightening for a month.) There are several new trends on the market, such as vampire facelifts and sunset colouring, that may generate attention and set your salon unique. If your firm develops big enough, you may franchise, but 99 percent of beauty salons only have one location.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
If your beauty shop is sued, becoming a formal business organisation, such as an LLC or corporation, prevents you from being held personally accountable.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
To run a beauty salon, certain state permissions and licences may be required. Visit the SBA’s reference to state licences and permits to learn more about licencing requirements in your state.
For information on local licences and permissions, visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Occupancy Certificate
A beauty salon is often operated from a storefront. A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a space:
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can get a valid CO for a beauty business.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you intend to buy or create a location:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building regulations and zoning standards for the location of your company to guarantee that your beauty salon will be in compliance and able to receive a CO.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Market and Promote a Beauty Salon
Determine what a consumer wants and then begin to fill in the blanks. For example, you may have fewer salons open late on weeknights, or you may have higher-quality colour treatments that last longer than other salons. Set up a referral or loyalty programme to encourage clients to spread the word about your company. These discounts will guarantee that clients promote your company and return for your services.
Your consumers are most likely on social media, which is an excellent location to sell. Take images of all your accomplishments and keep your feed updated – even if interest is modest at first. If there is a local trend (for example, sunset colour), it should be prominently shown on Instagram and Facebook business profiles.
How to Keep Customers Returning
Make every client engagement a success. Customers will connect success with your services as a result, and they will also tell others about your company. Consider the client experience from every angle: locating the salon, getting there, parking, leaving, and so on. Use sites like Yelp to your advantage, and never leave a complaint unanswered. If you want to grab people’s attention, be generous. Although 10% discount may sound like a lot, it is unlikely to impress someone who already has a connection with another salon.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.