Your Guide to Opening a Salon

Your Guide to Opening a Salon

You’ve been working as a hairstylist in someone else’s salon for some time. You’ve built up your reputation and improved your skills- so you are considering opening your salon. Unfortunately, you’re not sure how to do it. In this guide, we’ll explain the 5 steps to opening your own salon business.

5 Steps to Opening Your Salon Business

When you decide that you want to open your salon business, you need to be very methodical about it. After all, you want it to be successful. Therefore, keep the following 5 steps in mind.

Determine Your Costs

When you are opening a salon business- or any other business for that matter- finances should be a top concern. After all, your goal is to be profitable as quickly as possible, but startup costs may make you anxious. However, a little bit of planning can help you get past those hesitations. Take the time to establish your costs, forecast your potential revenue, and determine your “break-even” point.

First, you’ll need to determine your fixed costs or those that incur monthly that doesn’t change with your sales volume and is usually non-negotiable. Fixed costs for a salon business include:

Rent/lease agreement

Then, consider your variable costs, or the costs that change based on sales volume. This includes:

Products/tools used by stylists
Labor costs
Shipping/delivery costs to restock hair products

Once you determine the monthly expenses of your salon business, you need to create a revenue forecast for the first year and figure out your break-even point, where revenue and expenses zero each other out.

You can then use this information to create a budget to keep you on track and avoid overspending.

Purchase/Lease Salon Equipment

You found the perfect space for your salon business, signed the lease, and picked up your keys. Now, you need to fill it out.

It’s important to know that it’s easy to get caught up in buying décor, equipment, and furniture. However, those things can get expensive. A major portion of the startup costs for your salon business is equipment. To keep costs down, make a list of the basic materials you need:

Salon stations with a chair, mirror, and storage space
Shampooing stations with chair, bowl, and storage space
Drying stations for coloring services

The amount of equipment you need depends on the size of your salon business and how many stylists you plan to hire. Most salons assign one station per stylist, but if you have stylists working opposite schedules, they may be able to share. Another option is to lease your equipment instead of buying it. This reduces your upfront cost significantly.

Most salons also have a small reception area and a front desk for clients to check-in and wait for their stylist to become available.

Hire the Right Staff

For your salon business to be successful, you need to hire the right staff. After all, the quality of your stylist’s work can make or break your business. Therefore, before starting the interview process, make a list of what you are looking for in the ideal candidate, such as:

Attitude/work ethic

Here are a few more considerations when hiring staff for your salon business:

Register for an EIN

Before you hire anyone, you need to make sure you register with the IRS for an Employer Identification Number or EIN. This is a unique 9-digit number that you will use for tax purposes. An EIN is a social security number for your business.

Hiring Process

When you begin the hiring process, make sure you’re following proper procedures. You must confirm that they are eligible to work in the US, run a background check, obtain workers’ compensation insurance, and set up records to withhold taxes.

Once you hire your employees, you may think the hard part is over. However, it’s important to understand that this industry is competitive, and stylists often jump from one salon to another. To reduce employee turnover in your salon business, you must give your staff a reason to stay.

Compensation Models

There are several compensation models for a salon business, including:

Independent contractors
Booth renters
Hourly pay
Hourly pay with commission (tiered or flat-rate)
Hourly pay with bonuses based on performance

Choose Your Software

Now that you’ve procured your space, equipment, and hired staff, you need to determine how you plan to accept payments and make money. There are a couple of software options you’ll want to consider for your salon business:

POS System

This is how you accept payments. Make sure that you choose a payment processor that has clear pricing and no hidden fees. The processor should allow you to accept any form of payment your client wants to use: EMV Chip, NFC (mobile payments), and magstripe. When considering the various processors, ask the following:

What does setup entail?
How quickly are payments deposited after the transaction?
Is the processor secure?

However, your payment processor should not be isolated. Ideally, you want to integrate your payment processor with the rest of your business operations, including appointments, team management, and marketing.

Scheduling Software

Ideally, your salon business POS system will also act as a receptionist, which can help with your scheduling. If you integrate an online scheduling tool with your POS, clients can access their stylists’ calendars and make appointments at any time. You can create notes on clients and client info is saved in a directory that you can access in the POS system to create a smoother checkout experience.

Additionally, you should be able to access sales reports, manage inventory, and even create custom discounts in your salon business POS system. Finally, you can use it to get feedback from customers via a private channel. This will all give you a big picture view of your business and help you easily and efficiently manage your salon business.

Develop Your Marketing Plan

Last but not least, you must develop a marketing plan for your salon business. This will give you an understanding of your priorities and help you determine what you need to do to achieve your goals. The best way to grow your business is to set goals and outline how you plan to get there.


You’ve been wanting to start your own salon business for some time now. You’ve finally decided to do it- but you can’t just jump in, you must be methodical. Keep these five steps in mind for opening your salon business and if you need extra guidance, contact Master’s Commercial Capital Group. We will be happy to help.