The beauty industry continues to grow: according to IBISWorld, the revenue of hair salons alone will exceed $60 billion in 2024, not counting other cosmetology services. However, despite this potential, almost 60% of salons close within the first five years after opening. The main reasons are financial mistakes, poor management, poor choice of location and lack of a promotion strategy.
Yuliia Pinchuk, an expert in salon business management and the founder of Fluffy and La Fleur, shares her experience on how to build a profitable salon from scratch, avoid common mistakes and successfully develop a business in a highly competitive environment.
Choosing a Niche and Positioning a Salon
According to Zenoti, the lack of clear positioning leads to salons having twice as many difficulties in attracting clients. This is explained by high competition and changing consumer preferences. Clients are looking for more than just a place to get a haircut or manicure, but a unique experience that matches their values and lifestyle. Therefore, defining a niche is becoming one of the key success factors.
There are several most popular salon formats:
- Premium salons: aimed at clients with a high income level, offering elite care procedures, an individual approach and the use of luxury cosmetics (for example, Oribe, La Mer, Kérastase). In such establishments, special attention is paid to comfort: an exclusive interior, personalized recommendations and VIP service. The average bill in such salons is 35-50% higher, but the level of investment in design, equipment and staff training is also significantly higher.
- Express formats: fast service salons, where the main emphasis is on the speed and availability of services. For example, express manicure, 15-minute styling, coloring using the “Gloss & Go” technology. This format is aimed at busy clients who are willing to pay extra to save time. Such establishments operate on the principle of high traffic: the more clients per day, the higher the profit.
- Eco-salons: specialize in safe and environmentally friendly products, biodegradable materials and energy-saving technologies. The demand for sustainable cosmetics is growing: according to Statista, about 57% of consumers in the United States prefer services that do not harm the environment. Such salons use organic hair dyes, natural oils and biodegradable consumables.
- Multi-format studios: combine several areas: hairdressing services, cosmetology, massage, barbershops, nail design and even wellness procedures. Such establishments are designed for clients who want to get a full range of services in one place, without visiting several different specialists. However, launching such a salon requires significant investment and careful logistics.
Yuliia Pinchuk used two different strategies when launching her salons. La Fleur focused on premium service, including individual care procedures, the use of professional cosmetics and exclusive offers for clients. Fluffy, on the contrary, prioritized narrow specialization and speed – the salon offered express manicures with a fixed time for the service, which attracted busy clients and allowed to increase the flow of visitors.
Financial Planning: How Much Does it Cost to Open a Salon?
One of the main mistakes of beginning salon owners is underestimating the initial budget. According to experienced entrepreneurs, the actual costs of opening a salon can exceed the initial estimates by 1.5-2 times. For example, one of the salon owners in the USA planned to invest $40,000, but in the end the costs exceeded $100,000.
Let’s consider the main expense items:
1. Rent of premises
The cost of rent depends on the location, area and infrastructure. On average, it is:
– $3,000-5,000 – small premises in the suburbs or areas with low competition.
– $6,000-10,000 – rent in prestigious areas of megacities with high traffic.
Rent in shopping centers may include additional fees for utilities, parking and advertising, increasing the cost of maintaining the business.
2. Repairs and adaptation to standards (ADA, ventilation, electricity)
Repairs and bringing the premises into compliance with standards often become the most expensive budget item. For example, ADA standards (American Accessibility Act) require the installation of wide doors, low sinks, convenient entrances for clients with limited mobility.
Typical expenses:
– Repair of the premises – from $20,000 to $50,000, including finishing, lighting, ventilation system.
– Electricity and plumbing – on average $15,000-$25,000, since salons require powerful electrical wiring and water supply to work areas.
– Creation of ADA-compliant infrastructure – up to $15,000, including adapted bathrooms and waiting areas.
3. Purchase of equipment and cosmetics
Without professional equipment and high-quality products, it is impossible to provide a high level of services. Average costs:
– Hairdressing chairs, mirrors, sinks – from $7,000.
– Manicure and cosmetology tables – from $5,000.
– Sterilization devices, manicure lamps, cosmetology devices – from $8,000.
– Consumables and cosmetics – initial investment from $10,000, depending on the chosen brand.
4. Licenses, insurance, legal expenses
– Business licenses – from $500 to $2,000 (varies by state).
– Business insurance – on average $1,500 – 3,000 per year (liability insurance, fire insurance).
– Legal support – from $2,000 for business registration, lease agreements, employment contracts.
5. Marketing and promotion
In a highly competitive environment, it is impossible to attract clients without advertising. Average marketing budget:
– Website creation and SEO – $2,000-5,000.
– SMM and targeted advertising – from $500-1,500 per month.
– Offline promotion (flyers, signs, promotions) – from $3,000.
Salons that actively use digital marketing increase customer flow by an average of 30-40% (Statista, 2024).
Reserve fund: the importance of a financial cushion
It can take from 6 to 12 months to reach self-sufficiency, so experts advise setting aside a reserve fund. It is advisable to have a reserve that covers rent, salaries, and operating expenses for at least 6 months.
Minimum amount for break-even operation:
– Small salon – reserve fund from $30,000.
– Medium salon – $50,000-80,000.
– Premium salon – $100,000 and more.
Cost Optimization and Financial Management
Beauty salons often face high costs for materials, rent, and electricity. To control the budget, Yuliia Pinchuk used several strategies:
– Concluding long-term contracts with suppliers – this reduced the cost of consumables by 15-20%.
– Automated customer accounting and online booking – allowed more efficient schedule management and minimized downtime.
– Flexible pricing system – discounts for morning hours, service packages, and bonus cards helped increase the average bill by 18%.
According to Zenoti, automation of business processes allows you to reduce costs by 25% and increase customer satisfaction.
Loyalty Programs and Marketing
Personalized service
To retain customers, it is necessary to build personalized interactions. La Fleur used customer cards that record visitor preferences. This helped increase the number of repeat visits by 35%.
– Bonus programs – accrual of points for visits with the possibility of exchanging for services.
– VIP cards and gift certificates – increase customer loyalty.
– Automated appointment reminders – reduced visit cancellations by 40%.
Promotion in the digital environment
Salons that actively use social networks and online booking have 30% more clients (Salon Spa Connection, 2024).
Effective channels:
– Instagram and TikTok – photos of work, video transformations, promotions.
– Google My Business, Yelp – important for local promotion.
– Email and SMS newsletters – personalized offers for clients.
Conclusion
Creating a successful salon business requires a strategic approach, financial literacy and customer focus. Yuliia Pinchuk’s experience shows that personalization of services, cost control and automation of processes allow a salon not only to survive, but also to develop in a competitive environment.
By implementing technological solutions, a flexible personnel management system and effective marketing strategies, salon owners can increase the profitability and sustainability of their business even in difficult economic conditions.
