How to Start a Salon Business: an Ultimate Guide

According to salt society, the hair industry has grown at an astounding rate over the past decade, with salons now representing 95% of the U.S. hair market. In addition, other industries are also beginning to adopt this trend: beauty supply stores, spas, and manicure or pedicure shops are also expected to grow as consumers increasingly seek out services outside of their home environment.

As consumers become more comfortable spending money on salon services and beauty products, they also seek new ways to spend that money to feel better about themselves. One way is through online shopping; according to statistics from Google Trends, searches for “salons” have surged by 150% in the past five years, which shows that people are using the Internet as a source of information about improving their personal appearance through professional services.

Knowing where to begin cannot be easy if you plan to start a salon business. Here are some essential tips for opening your own salon business including how to create an effective business plan:

Understand the salon market

The salon industry is highly competitive, and it’s essential to know how to stand out from the crowd.

How to start a salon business

In today’s market, there are thousands of salons competing for customers. To avoid being overshadowed by the competition, you need to understand the world of the salon business.

1. Develop a salon business plan

Whipping up a perfect salon business plan can be a daunting task. Whether it is a simple hairdressing salon business plan or a cosmetic salon business plan, having a well-defined business plan is essential for the success of your salon business.

Here are the foolproof steps in creating a successful salon business plan

2. Create a mission and vision statement

The mission statement articulates the purpose of your salon business. State the short-term goals that you hope to achieve within six months. Setting strategies toward your long-term goals ensures you don’t stumble on the road to success. This should be well articulated in the salon business plan.

A vision statement makes the overall structure of your business stronger. Better business strategies will prepare you for any fickle market demands. Your salon business end goals should drive your vision statement. You can use marketing tools to create your business statement.

3. Create the salon executive summary

The executive summary will define everything that you hope to achieve with your salon. Whether writing a hair salon business plan or a business plan for a cosmetic shop, your intentions should be well-defined. The most important part of a salon business plan will define the tone of your salon and make a positive impression.

4. Define your niche

The beauty industry is highly competitive and saturated, so you will need to find a niche that other salons have not covered in your area or by the competition. This could be an area of expertise, or it could be a specialty service. For example, if you are planning to start a salon business, it may make sense to target a niche where there is already a need for natural products or organic products. You will also want to consider who your clients will be.

If you are opening a cosmetic hair salon and your target client base is women between the ages of 25 and 50, it makes sense to offer services that meet their needs and interests. For your venture to succeed, you will need to establish yourself as an expert in this field and gain the trust of potential new clients by offering value-added services that are superior to those offered by other salons in your area.

5. Do market research

For your salon business idea to succeed, you must ensure sufficient demand for what you have planned on offering, and to do you can leverage market research tools to know the truth behind the picture. It would be beneficial if you also determined whether there are any barriers preventing customers from seeking out your services.

Determine your target client base and how you can reach them. You may want to create a niche market that appeals to an underserved audience through the other salons in town. This will help you determine your business’s best location, pricing, and marketing strategies.

6. Know your competitors

You need to know your competition to decide what services to offer and at what price point. Suppose there are no other salons in town that offer similar services. In that case, you can set yourself apart from the rest of the competition by offering something unique or different from everyone else.

7. Establish your target client base

Once you have identified your target client base, determining how best to reach them becomes much easier. For example, suppose most of your clients are women with children. In that case, advertising in magazines targeted toward mothers with young children could be an effective way of reaching potential customers for your salon business.

The executive summary section should be brief and concise. If you are having a challenge writing this section, you can report it after writing other parts to understand your salon business better. This will ensure you succinctly put all points together.

Define your Salon business model

How to start a salon business

Your Salon business model is the decisions you make to create value for customers and sustainably generate income. It includes everything you do to build a business, including how you sell, how much and when you charge your functional costs, and how much profit you make.

1. Buying a franchise 

Buying a franchise is by far the easiest way to start a salon business, but it comes with some significant risks. If your chosen franchise does well, you’re guaranteed success; if not, you could lose everything. In addition to this risk of failure, there’s also a time commitment involved: You have to decide on which product line or service you want to offer before committing yourself to buy into the franchise, which may take several months or even years.

2. Building a salon from scratch

Although this option requires more initial investment than buying a franchisee, it also gives you more freedom when designing your own brand and space. You can choose your location and space anywhere in any city that meets your needs, including rent. And since there’s no pre-existing brand name or established customer base, it’s much easier for new businesses like yours, especially those with limited resources, to find new customers.

3. Buying a salon and modifying 

Buying a salon and modifying it is one of the most common ways to start a salon business.

The process of buying an existing salon, or a salon that has been shut down or is for sale, can be quite complex and take several months to complete.

Buying an existing salon, especially in good condition, allows you to start immediately. You have no worries about renovating the building or buying equipment for your new business.

Define your salon startup costs

Before mapping out your salon finances and securing funding, you need to consider exactly why you need the funds. Some common salon setup costs include:

1. Licenses and business permits

To start a salon business, you will require a business license and other regulatory permits in that area. You will also require a seller’s permit if you sell beauty products.

2. Real estate

You can choose to either rent or buy your business operating premises. If you choose the option of paying a monthly lease, you will need to provide a security deposit at the beginning of the month.

3. Payroll

This will include all your employees’ wages and the associated benefits such as transport allowance.

4. Salon Equipment

A salon requires several pieces of equipment, such as hair dryers, chairs, sinks, and other beauty supplies.

5. Inventory

If you plan to sell beauty products in your salon, you must stock up your inventory.

6. Insurance

You will need business insurance cover to cover your salon in case of eventualities.

Find a way to finance your business

Salons are high-risk businesses, and banks are hesitant to finance salons. There are numerous options for traditional loans. Here are some popular financing options you can use to start a salon business:

1. SBA loans

SBA loans have low rates and fast payback periods and are suitable for small startups. These loans are competitive, and you will need a strong credit score to qualify.

2. Microloans

It is easier to get a microloan than an SBA loan since you don’t need an expansive credit history. It is essential to have a solid salon business plan in place before getting a loan.

3. Alternative lenders

Alternative lenders are more accessible compared to other sources of capital. If you need money urgently, you might consider an asset-based loan, credit card or term loan.

4. Equipment Financing

A salon requires chairs, sinks, hair dryers, and other equipment. When you start a salon business, it can be challenging to afford all the purchases. Equipment financing you have funds to front the equipment payments so you can start a salon business on the right foot.

Rather than buying all salon equipment, you can lease a few pieces of equipment to reduce the upfront cost. Some financiers will offer equipment financing and use the salon equipment as collateral.

Choose a strategic location

A good location for your salon will help you attract customers and build a loyal clientele. A great salon can increase your business income and enhance your reputation. A strategic location is one that is convenient for customers to reach but also provides parking, storage space and other resources required by your business.

Also, your salon needs to be located where other salons are nearby. You cannot expect your customers to travel far to get their hair done. Customers may end up going elsewhere if they have no choice, but this can cause a loss in revenue for you.

Decide on the interior and theme

The best ways are by budgeting for a designer and deciding on the theme for your salon. This will help you choose salon colors and patterns when starting a salon business. You can also choose a specific style to ensure that your customers feel welcomed and comfortable. 

If your salon is situated in an older building, you can use amenities such as wood paneling or stone countertops to make it seem more modern and upscale. You may also want to consider having chairs with high backs so customers can relax while receiving services at your salon.


Salon services and products are becoming more and more popular. Thousands of people worldwide decide to start small businesses of their own, setting up salons in their own homes or local communities. And it’s not surprising – even small salons can make a lot of money if you learn how to manage them properly.

Cutting out a specific niche for your salon business is crucial because it helps keep you focused and allows you to better understand what you want from your salon. Make sure to look up as many other salons as possible, whether in your area or not, and get inspiration from them to make your salon business succeed.

Frequently asked questions related to starting a salon business

How to start a salon business with no money?

If you are considering opening a salon, it can be easy to think you need a lot of cash to start. But as long as you’re willing to do some research and desire to succeed, it’s not necessary. And by starting with a small amount of capital, you can grow your business into something much larger over time.

How much will it cost to start a salon business?

The cost of starting a salon business varies depending on the size and location of your salon, as well as whether or not you have any experience in the industry. We recommend you talk to your local beauty school or other educational institution for more information about how much it costs to open up a shop and how much you will need to invest in operating costs.

Are salons profitable?

Yes, but not for everyone. And it all depends on your niche.
Salon businesses are a great way to make money and help people look good. If you run your business well and take care of your clients, you can succeed in the salon industry. Plus, if you’re willing to invest some time in marketing and customer service, there are plenty of ways you can make money as a stylist.

Why do salon businesses fail?

The main reason that many businesses fail is that they don’t know how to market their business properly. Without proper marketing, there won’t be any customers coming into their salons to get their hair done or buy products from them.

Suraj Kr. Prakash
Suraj Kr. Prakash is the chief editor and founder of Dhandho Karo, who has been writing since he could hold a crayon to a page. He writes articles for Business and Marketing to assist entrepreneurs, startups, and freelancers in their endeavors. You can find him mentoring students or watching documentaries when he's not working.

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