Here are the Need-to-Know Costs When Opening a Salon

Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, or health & safety advice. For guidance or advice specific to your business, consult with a qualified professional.

The UK hair and beauty services industry includes over 45,000 businesses. So, how much does it cost to open a salon? Costs can vary depending on how large of a salon you’d like to open, where you are located, and business structure. Here are costs to consider.

According to the 2020 NHBF report, the U.K. hair and beauty services industry includes about 45,000 businesses with a combined annual revenue of around £8 billion. This, according to the report, includes nearly 300,000 beauticians, barbers, and hairdressers working across the UK.

How much does it cost to open a salon? Costs can vary depending on how large of a salon you’d like to open, where you are located, and business structure. Here are a few costs to keep in mind.

Salon startup costs

Licences and permits for a salon

Licences and permits needed for a salon are incredibly important when you’re first getting your business up and running. It’s a good idea to make a checklist of all the licences and certificates you will need - just so you don’t miss anything. Some commonly needed licences and documentation include:

• Business licence: It’s important that you remember to register your independent business with HM Revenue & Customs (HMRC) to avoid any unwanted fines, and to ensure you’re being taxed correctly.

If you’re not registering as a sole trader, however, you’ll need to register your ltd. company with Companies House. You’ll also need to let HMRC know too.

• Personal qualifications and certificates: It may seem a little obvious, but if you’re selling your professional services as a hairdresser and/or beautician, you need to make sure you have the correct qualifications.

• Premises licence: You’ll need to contact your local council or authority to apply for this. This allows you to operate legally, and you need to make sure that your licence type covers the type of services you will be providing. For example, if you are providing massages or other treatments such as those involving heat or light, you will need to apply for different licences.

• Music licence (PPL): We all want our clients to be as relaxed as can be - so that means finding the perfect shop playlist. However, you need to make sure you have your PPL licence sorted to avoid any fines or copyright issues.

Decide on your salon’s structure

There are several structures you can choose for your salon, each with its own pay structures for your employees. In addition to the type of salon you want to own, think about what kind of business entity your salon will be. The form of business you choose could affect your taxes, earnings, and more.

Chair or booth rental salon

In a chair or booth rental salon, the owner acts a bit like a landlord. You can rent out chairs or booths and the individual stylists are responsible for processing payments, setting their rates, booking appointments, restocking supplies, and marketing themselves. As the owner you would charge a rental fee and stylists in your salon would be like renters. You would not be responsible for typical benefits associated with a full-time employee like health insurance or other benefits. Think of your stylists running their own mini businesses with yours.

Commission-based salon

This salon would operate more like a traditional small business. You, as the salon owner, would hire stylists as employees. You can set the schedule, rates, appointments, and salon policies. In this business structure you would also typically provide employee benefits like health insurance. For this type of salon you have several ways of paying your employees, the two most common are flat-rate commission and tiered commission.

Necessary salon equipment

Whether your salon specialises in colour or cuts, there is some equipment to consider when calculating the costs to open your salon, including:

• Salon chairs
• Combs and brushes
• Dryer chairs
• Carts
• Mirrors
• Shampoo stations
• Scissors or haircutting shears
• Shampoo, conditioner, dyes, and other products to treat and style hair; you may also need to stock the back bar with products and supplies for services
• Cleaning supplies
• Stylist trolleys
• Towels

Operational costs of a salon

Beyond licences, maintenance, and equipment, there are some additional operational costs that you will want to keep an eye on.

• Bookkeeping and payroll software: If you are hiring employees, you may want to invest in a payroll system, hire an accountant, or use accounting software to streamline managing costs and employees.

• An online presence: If you are planning on connecting with customers online, you may want to invest in your social media presence or a website.

• Salon insurance: For you and your employees’ peace of mind, you should ensure that you have all the insurance documents you need to cover your business under all eventualities. The prices of each will depend on your premises, the services you offer, and your area. Examples of these include:

• Buildings and contents insurance
• Public liability insurance

• Employer’s liability insurance

• Utilities and bills: From water to electricity, there are recurring bills to account for when thinking about starting a salon business.

• A Point of Sale System: If you are processing payments, consider a Square Point of Sale system for your business.

• Scheduling software: You can schedule appointments through Square Appointments for free, which integrates with your Square Point of Sale system. As you hire more staff, there is a monthly subscription and processing fee plan that can scale depending on the size of your team. You can also add flat-rate or tiered commissions to incentivise and compensate your team.

• Renting or buying physical space: Whether you rent or buy your salon, you’ll need a physical location to service your clients.

If you’re just starting your business, putting together a business plan as well as conducting market research will help you make sure your business has everything it needs before opening its doors.