Breaking down salon startup costs

Before you can break down the costs of starting a salon, you’ll have to decide what type of salon you want to start. Hair? Nail? An all-inclusive spa enterprise? Nail salon expenses will differ from those of a hair salon, while the average cost to open a barbershop will differ from the cost to open a nail salon or spa. This decision should be first on your list, as it will inform how you estimate the costs of your venture. But regardless of specifics, it’s helpful to break down startup costs into two categories: one-time costs and recurring costs.

One-time costs
The initial, one-time costs to open your salon will vary depending on the type of salon you want to open and how you plan to go about it. Do you want to rent or own the physical location? How big is your operation going to be? These are the kinds of questions you’ll need to answer as you proceed. You can use these parameters to gauge the estimated costs of your particular startup and answer questions like: “how much does it cost to open a hair salon?” or “how much does it cost to build a salon from the ground up?”

Certification – you should have this covered before all else. All working stylists must hold a state cosmetology license (or be enrolled in an accredited beautician program). These licenses must be issued in the same state as your salon location and posted on the premises. The costs of obtaining certification will vary between specialties.
Licenses and permits – there are a few bases to cover before opening your salon. First off, you’ll need a business license, the cost of which varies according to state and city of operation. You’ll need to look into the required health and safety compliance permits for your location as well. Again, costs vary across the board. Another aspect to consider is a seller’s permit. Do you plan on having a retail section in your salon? This can be a great platform to sell cosmetic products related to your service offerings, so a resale permit may be worth obtaining. As you plan, do your research and keep in mind that proper licenses and permits are an absolute must.
Physical location – now that you’ve got the back end covered, it’s time to consider physical space. If you’re looking to lease, you’ll most likely be responsible for a security deposit and a couple months of rent up front. Costs will vary depending on location and size, but it’s always a good idea to do comparative research within your desired neighborhood. If you plan on purchasing a space, the costs will rise significantly. Expect to set aside $40,000 to $250,000 to purchase an existing salon (dependent on location, size, and condition of the property and equipment). Bump that up to $100,000 to $500,000 on average to build a salon from the ground up.
Salon equipment – equipment costs will vary depending on type of salon. A full hair salon expense list is estimated to total about $27,000. That includes everything you'll need—hood dryers, shampoo and coloring stations, scissors, clippers, etc. A simple barbershop or nail salon will require less equipment. Starting out, you might want to pick and choose equipment to fit your budget. For any type of salon, you’ll need styling stations with chairs, which can range from $200 to upwards of $1,000. Carts and trolleys are necessary to organize individual stylists’ tools in the case of shared stations. For these, you can go cheap for about $40 or go high quality for about $300.
Initial supplies – both hair and nail salons use specialty products for client services. Costs will vary by brand but make sure you consider sanitizers, perm rods, hair capes, towels, shampoos, conditioners, specialty polishes and the like. Supplies add up quickly—stocking everything you need can cost up to $20,000 to start.
Initial inventory – if you plan to have a retail portion to your salon, you’ll need to stock an initial inventory of beauty products in addition to shop supplies. This cost is dependent on the size of the retail display portion of your salon and should be adjusted as you move forward in your venture, driven by customer demand.
Legal and consulting fees – you may need professional help negotiating your lease, closing the property sale, or just muddling through the necessary licenses and permits for your salon. Expect to pay around $200 per hour for these services.
Insurance – insurance is a legal necessity, so you’ll have to account for it in the budget. You’re looking at $500 to $700 per year on average for a salon.
Building improvements and remodeling – if you’re taking over an existing salon, there may be little to no renovations necessary. However, if you’re starting with a blank slate, you’ll have to consider permanent and nonpermanent fixtures as well as any design elements necessary to your business model. Factor in furniture and interior decorating and you’re looking at an average of $32,000.