You’ve likely visualized the aesthetic: sleek chairs, perfect lighting, and a bustling atmosphere. But before the first client sits down, you must face the facts: opening a salon won’t be cheap. That’s why it’s vital to understand the numbers before getting started. It’s what can be the difference between a thriving business and a short-lived venture. That’s why we’re here to show you the financial reality of starting your own salon.
Initial Investment Costs
Securing a physical is your biggest upfront hurdle. Even if you find a good place, you’ll need to budget for renovations to fully implement all of your salon equipment. This is because these establishments require specific plumbing and electrical setups that standard retail spaces often lack.
Then comes the hardware. You’ll need enough money to buy the big stuff like chairs and workstations. Fortunately, you’ll have the option to rent, buy, or finance this kind of salon equipment. Smaller hair and nail tools shouldn’t cost as much, but you’ll need a lot of them. Plus, some of them can get pretty pricey.
Don’t forget the administrative side, either. Business licenses, health department permits, and cosmetology board certifications vary by state but remain non-negotiable legal expenses that you need to settle before opening day.
Ongoing Operational Expenses
Once the doors open, the bills become recurring. While your rent is a fixed cost, utilities like water and electricity will likely be higher than average due to constant washing and lighting. Insurance is another non-negotiable to protect your property and liability.
The biggest line item, however, is usually payroll. Whether you choose a commission structure or hourly wages, your team is your most valuable asset and accounts for a significant portion of your monthly spend. You also need a constant flow of inventory. This includes “back-bar” supplies used during services (shampoo, color, foils), which are a direct cost of doing business.
Hidden or Unexpected Costs
It’s the expenses you don’t anticipate that often hurt cash flow the most, and are often the financial reality most people overlook or forget about when starting a salon. Marketing is one of the big ones here. While you might think it’s skippable, it’s absolutely essential if you want to get people in the door; relying solely on foot traffic rarely works for new businesses. You will need a dedicated budget for social media ads, local outreach, and perhaps a launch event.
Equipment requires maintenance, too. A malfunctioning HVAC system or a broken hydraulic chair needs immediate repair to keep the business running. Additionally, modern salons run on software. Booking systems, POS terminals, and management tools are usually available through monthly subscriptions. Even credit card processing fees can eat into your margins if not monitored closely.
Revenue Streams and Profit Margins
Revenue isn’t just about how many haircuts you can schedule. While services like coloring and treatments offer high margins, they are labor-intensive and time-limited. Retail product sales—shampoos, conditioners, and styling tools—are the secret weapon for boosting profitability. They increase the ticket size without adding labor hours.
Finally, be prepared for the calendar. Salons often see revenue booms around holidays and lulls in January or late summer. Planning for these seasonal fluctuations ensures you have enough cash reserve to cover operational costs during the slower months.
