Hair Salon Business Overview
Hair salons provide professional hair care and styling services to clients. These businesses offer haircuts, coloring, styling, and hair treatments, with some locations expanding their services to include nail care, skin care, and other beauty treatments.
Most salons in the industry are small, local businesses, though larger regional and national chains operate multiple locations. According to the National Association of Cosmetology Schools, over 80% of salons in the United States have fewer than 10 employees. The industry includes several distinct business models, each with different operational requirements and income potential:
- Single-Owner Operator: A stylist who works alone, renting a small space or operating from home. This model minimizes overhead costs but limits the potential client base.
- Booth Rental Salon: The salon owner maintains the facility while independent stylists rent chairs and manage their own client lists. Each stylist operates as a separate business within the space.
- Commission-Based Salon: This is a traditional model in which the owner employs stylists and pays them a percentage of their service revenue. The salon provides equipment and products and maintains the space.
- Full-Service Salon and Spa: These establishments combine hair services with additional beauty treatments like manicures, facials, and massage therapy. This model requires more space, staff, and equipment.
- Franchise Salon: These salons follow standardized procedures and branding as part of a larger brand network. They often receive corporate support for marketing and operations but must pay franchise fees.
- Mobile Salon: Stylists travel to clients’ locations, offering convenience but requiring transportation and portable equipment. This model eliminates facility costs but adds travel expenses.
Industry Statistics
Hair salons operate under NAICS code 812112, encompassing establishments primarily offering hair care services. The industry has evolved from basic barbershops of the early 1900s to modern full-service establishments. A notable shift occurred in the 1960s when unisex salons became popular, transforming the traditionally gender-segregated market.
This industry is characterized by its low barriers to entry, which means it’s relatively easy to open a salon compared to other businesses. However, the competition can be intense, so standing out through service quality, expertise, and branding is important. The industry is not just about cutting or styling hair; it’s about providing a customer experience that fosters loyalty and word-of-mouth referrals.
Market Size: The hair salon industry generates annual sales of $60.4 billion across 950,000 locations in the United States. The market remains highly fragmented, with no single company holding a significant market share. Larger companies include Great Clips, Sport Clips, and Supercuts, though combined, they represent less than 10% of total industry revenue. (IBISWorld)
Market Trends: The industry shows stable performance with modest growth of 0.5% annually. This mature market maintains steady demand through economic cycles, as consumers view basic hair care as a necessity. Recent trends include increased demand for organic and natural hair products, specialized treatments, and customized services. (IBISWorld)
The hair salon industry serves a diverse customer base seeking various hair care services. While individual preferences and needs vary, several distinct customer segments make up the primary market:
- Young Professionals: This group prioritizes appearance for career advancement and social life. They typically visit salons every 4-6 weeks and are willing to spend more on premium services.
- Families: Parents and children who need regular haircuts and basic styling services. This segment often looks for convenience, reasonable prices, and child-friendly environments.
- Style-Conscious Consumers: These clients stay current with hair trends and frequently request coloring, styling, and treatments. They visit salons more frequently and spend significantly more than average customers.
- Senior Clients: Regular customers who often schedule standing appointments for basic maintenance services. This group values relationship-building with their stylist and typically visits every 3-4 weeks.
- Special Occasion Clients: Customers seeking services for weddings, proms, and other events. This segment requires detailed consultations and premium styling services, often booking well in advance.
- Male Grooming Focused: Men seeking regular cuts and increasingly interested in coloring and styling services. This growing segment typically visits every 2-4 weeks and values efficiency and consistency.
Startup Stories
How Much Does It Cost To Start a Hair Salon?
Starting a hair salon typically requires between $50,000 and $250,000, depending on factors such as location, size, and business model. This range reflects the differences between a small, basic salon and a high-end establishment in a prime location.
The largest startup expense is usually leasehold improvements, ranging from $30,000 to $100,000. These modifications include plumbing installation for shampoo stations, electrical work for proper lighting and equipment, and interior design elements that create an appealing atmosphere for clients.
Equipment and furniture costs typically total $20,000 to $60,000. This includes styling chairs, shampoo stations, mirrors, styling tools, and reception area furniture. Professional-grade equipment like hair dryers, steamers, and styling tools must meet commercial standards and withstand continuous use.
Initial inventory investment ranges from $5,000 to $15,000. This covers professional hair care products, color treatments, styling products, and retail merchandise for client purchase. Maintaining relationships with reliable suppliers helps manage these ongoing costs.
Marketing and promotional expenses typically require $2,000 to $8,000 for initial advertising, website development, and grand opening events. Building a client base takes time, so adequate marketing funding helps attract customers during the first months of operation.
License and permit fees vary by location but generally cost between $1,000 and $5,000. These include business licenses, health department permits, and professional certifications for staff members.
Insurance coverage requires approximately $2,000 to $6,000 annually. This includes liability insurance, property insurance, and workers’ compensation coverage to protect against common business risks.
Working capital of $10,000 to $30,000 should be reserved for operating expenses during the initial months. This covers rent, utilities, payroll, and other expenses while the business builds its customer base.
Resources
American Barber Association
Professional Beauty Association
Salon & Spa Professional Association
Salon Today