The True Costs Of Opening A Salon That Will Thrive

4 min

The True Costs Of Opening A Salon That Will Thrive

Opening a salon is exciting – especially if it’s your first – but it’s important to get it right from the very start. I’ve seen too many salons open up and be out of business within six months to a year because they hadn’t thought it through. It’s not enough to tell the world the good news by hosting a launch night and expect clients to come flocking through your door after that.

Chances are you may already have a loyal following that you’ve built up elsewhere. If you’re mobile, you may find many don’t follow you to your salon as they might have different expectations or perhaps enjoy the convenience of home visits.

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Opening A Salon Or Spa Is About Knowing Your Numbers

You may find thinking about your numbers a bit boring, but they are fundamental to the survival and success of your business. Here are the essentials you need to think of when opening a salon.

Determine Your Break-Even Figure

How much will it cost for the salon to run weekly or monthly? To calculate this, list your outgoings:

  • rent
  • business rates
  • heat/light
  • product costs
  • staff costs
  • insurance
  • the wage you need to live on
  • loan repayments
  • accountancy fees
  • bank charges
  • refreshments
  • cleaning, etc

Then, divide the resulting figure by your average service cost. For example, if you determine that your salon’s outgoings are going to be €/£/$1,500 per month and your average service is charged at €/£/$20, then €/£/$1,500 divided by €/£/$20 = 75 services/clients per month, which is just to cover your basic costs. That’s your target, right from the start.

Make Sure You Have Money To Cover Contingencies

Until you have built a steady client base, make sure you have enough money to refurbish and cover cash going towards your basic outgoings. Many salons go out of business because they expect to be busy from day one and haven’t prepared for any contingencies. Make sure you have this money to use if you come to need it.

Current Clients

How many current clients do you have? Will they all follow you? Perhaps not; so how many will? And how much is that worth to you with the prices you’re charging in your salon? Determining this will gives you a rough base income to work with.

Think About New Client Retention

What percentage of new clients do you aim to turn into regular clients? And be realistic; you can’t expect 100%. Initially though, aim for 50-75%. By working this out, you can put together expected sales for your first year. For example, if you have:

  • 30 new clients coming to the salon each month, and
  • 50% of them become regulars who come back every 2 months (this is just to make it easier to follow, you would expect 4-6 weeks)

Then by the end of Month 1, you’d have 30 clients, Month 2, 30 clients, Month 3, 45 clients, Month 4, 45 clients and Month 5, 60 clients. It would be Month 7 before you have 75 clients. Increasing your retention to 75% would see you with 75 clients by Month 5 of opening your salon; aka, two months earlier!

Related | Expanding With A Second Location: Is Your Salon Truly Ready?

Hire An Accountant

Get yourself a good accountant who can help you plan and grow your business. An accountant who works with you and understands your business will help you avoid costly mistakes and save you money in tax and VAT. They can also ensure you have a rough idea how much tax you can expect to pay. Also, make sure they understand how to treat gift vouchers – I’ll cover this next month.

Other Practical Business Things To Consider

  1. If you have any current clients, ask them what they think of you opening a salon in xyz location that you chose. Would they be likely to follow you?
  2. Speaking of which, think about the location of your business long and hard. If you don’t have much footfall, then don’t expect many walk-ins. If you’re too far off the beaten track and there’s no parking, you’ll have to work harder to build your client base. Is it a rundown area? If so, it might be harder to attract quality clients.
  3. Get your price right, charge what you’re worth. If you’re too cheap, you will struggle to make enough money to cover your basics and grow your business. Remember: you need to have cash in the bank for taxes, repairs contingencies, etc. Also, if you don’t charge the right price, you could also be sending the wrong message to potential and existing clients about the quality of your service. In this industry, people generally believe that “you get what you pay for.”

One last thing: if you’re looking into hiring staff, the group of individuals you hire needs to work as a cohesive, motivated, enthusiastic team. One of the best ways, besides training, to guarantee your salon’s success is to hire the right people. Download Phorest Salon Software’s interview checklist reminder to help you do so.

Have a look at 5 ways you can make your salon feel established before the big launch night, and if you’d like more business and finance tips then join my Facebook group Knowing Your Numbers.

Thanks for reading! #LetsGrow

If you would like to get more business tips from Gloria, you can get a free copy of her printed business magazine by sending an email to


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Sabrina Addams
Sabrina Addams
March 3, 2020 1:33 pm

I like that you said to consider whether you have a steady client base and if they will follow you to your new location. Currently, my sister is a stylist out of her home and is starting to get very busy and popular. It seems like she could benefit from finding a salon for sale in Vancouver and expanding.

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