Apr 09, 2020

9 Costs You Should Expect With Your Beauty Salon Business 

You’ve invested years of training, built a solid book of loyal clients, and created a foolproof business plan. Now, you’re ready to start your independent beauty salon. But just like any savvy business owner, you must understand your overhead costs to run a beauty salon if you want to ensure business success.

Here are some of the most common beauty salon costs to consider.

1. Rent

Paying for a space to run your beauty salon will be one of your most significant monthly expenses. Additionally, you’ll need to consider that your space will probably undergo renovations. For example, it may need new flooring or proper plumbing. Rent ranges widely depending on the space you’re seeking. The starting cost to rent a salon booth, which is around 100 square feet, starts at $400. Normal salon spaces will cost you anywhere from $1,500 to $4,000 a month.

2. Equipment

With the right equipment, your salon should operate without a hitch. You can choose to either purchase your equipment up front or lease it. You may be able to lower equipment costs by purchasing used equipment from other beauty salon owners. However, most find leasing new equipment to be a better option.

3. Licenses and Permits

Before opening your salon, do your due diligence. Each state requires different licensing and permits. If you fail to get proper licensing, you’ll potentially pay a hefty fee. At the minimum, you should have a business and cosmetology license. But if you plan on adding services such as facials or nail care, you’ll also need the respective health permits. You may also want to consider obtaining a resale permit if you plan on selling products in your salon. Licenses charge annual or bi-annual fees to renew. On average, a business license is $50 to $100 per year.

4. Supplies

When it comes to beauty, keeping up with the latest trends is a must. Having a variety of color dyes, stylizing products, and miscellaneous items in stock will allow you to accommodate last-minute client changes. Unfortunately, beauty supplies aren’t cheap—they can cost you anywhere from $2,000 to $15,000.

5. Insurance

What happens if a fire breaks out? Or what if a client injures herself on your premises? In these situations, you can’t forgo renters insurance. Renters insurance will help mitigate the costs of any unexpected events, like property loss from a natural disaster or medical bills from an accident. The price of insurance depends on the number of policies and coverage you select. When thinking about how much insurance you need, consider the total value of your property and any potential lawsuits that may occur at your salon. Insurance for beauty salons costs $450 to $2,200 annually.

6. Payroll

If you plan on having a few stylists, payroll will be a substantial expense on your operating budget. On top of paying their salaries, taxes, and benefits, the real cost of an employee is typically 1.25 times their base salaries. According to a study by JP Morgan, 62% of business owners struggle to consistently make payroll on time. So if you can’t make payroll consistently, you risk losing your best stylists. Almost half of Americans say that if they experience payroll delays twice, they’ll start looking for a new job.

7. Utilities

Electric, water, gas—running a beauty salon means plenty of utility bills. Larger salons tend to incur more expenses because of how much energy they consume. Your bills will also increase if your salon comes with extravagant lighting or televisions to keep clients entertained. Salon utility costs range from a few hundred to a couple thousand dollars.

8. Credit Card Processing Fees

Most people use their debit or credit card to pay for services, which can eat up a sizable portion of your profits. Each time a client decides to pay with their credit card, you’re responsible for paying processing and transaction fees. Payment processing fees alone can cost you anywhere from 1.5% to 2.7% per transaction. For example, if you charge $50 for a haircut and your credit card processor charges you 2.7%, you’ll pay $1.35 in processing fees. While this may not seem like a lot of money initially, over time, it does add up.

9. Marketing

As a salon owner, it’s up to you to bring in new clients. Even if you have loyal customers, you’ll need more than word of mouth to make people come through the door. That’s why creating marketing campaigns is an effective way to pick up new customers. However, marketing your business frequently can be expensive. Although social media and email marketing can generate leads at minimal cost, Facebook ad campaigns can set you back a few hundred dollars.

About the author

Zoe Weisner
Zoe Weisner
Zoe Weisner is a burgeoning freelance writer based in the San Francisco Bay Area. A former product marketer, Zoe writes about finance and small business-related topics. When she’s not hunched over a keyboard, she enjoys exploring the peninsula and binge-watching Korean dramas with her pint-sized poodle. She has a BA in Philosophy from Smith College.

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