Beauty or Hair Salons

Hair salons provide all basic kinds of hairdressing services. They hire hairdressers, cosmetologists, manicure and pedicure specialists. Considering their professional equipment, tools, personnel qualifications, and the cosmetics – we can differentiate them into the following types:

-       Value-Based Haircare: the price policy is rather affordable and democratic. The availability of coupons and numerous discounts make it even more attractive. Usually, they offer “fast and furious” services. If you don’t have time – you’re welcome! The appointment is done on a walk-in basis. It sometimes leads to the waiting lines. Haircuts are provided for both genders and all ages. Salons of this type suggest quick coloring and facial waxing (rarely). As a rule, such establishments consist of only 1 - 2 work sits and are located in the residential districts.

-       Student Salons: are not that popular and spread. Their goals are based mostly on the educational needs of the personnel of a so-called cosmetology beauty schools rather than on commercial ground. Of course, all of the students have to pass several practical exams beforegetting “on the floor."

-       Up-Scale/Hairdressing Salon (Spa): the most typical and developed salon’s type. They’re all privately owned. The owner (or group of owners) buck for making big money. The higher overhead expenses result into the higher prices, but the services are still available for masses. All they try to do is to exceed the clients’ expectations by providing the latest trends which are all the rage. The professional level of this category’s personnel is rather high. There is no way of being served without time scheduling and appointment. Advanced cosmetic procedures and nail services are added.

-       Salon in a Store: those function on a franchise base (or are corporate-owned). These salons are basically found in the huge shopping malls somewhere in the city center. They’re created to ensure shoppers’ convenience and to complete the beauty shopping environment by raising the promotion rate. Both, walk-in and appointment time scheduling are available. According to numerous statistics, this type of beauty salons is considered to be the most visited and rated one.

-       Salon Suites or Booth Rental: the last but not the least. Occupying the space as large as a single room, their profits sometimes “hits the jackpot." The principle is built on a very tight customer-seller relationship. In most cases, salon suites are rented. All of the ideas, services, elements of design belong to its owner(s). Also, he/she defines the individual work schedule which is very unstable. This type is a great tax advantage for the owner as the booth rental is counted as a small business. The client base is often built of the most loyal customers and with the help of their references. 

Beauty Salon Startup Costs

Beauty Salon Costs from Forbes Magazine

If you are thinking about buying or selling a beauty salon or hair salon, consider these rules of thumb for valuing a hair salon business from The Essential Guide to Pricing a Business:

• 35 percent annual revenue; add fixtures, equipment and inventory
• 2 times SDE plus inventory
• 4 times monthly sales plus inventory
• 2.5 times EBIT

Industry Summary

The US hair care services industry includes about 86,000 establishments (82,000 beauty salons; 4,000 barber shops) with combined annual revenue of about $20 billion. Major companies include Regis, Ratner Companies, Premier Salons, and Sport Clips.

COMPETITIVE LANDSCAPE

Demand is driven by demographics and population growth. The profitability of individual companies depends on technical expertise and marketing skills. Large companies enjoy economies of scale in purchasing and marketing. Small companies can compete successfully by offering superior service or securing favorable locations. The US industry is highly fragmented: the 50 largest companies generate about 15 percent of revenue.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products are hair cutting, hair coloring, nail care, skin care, and merchandise sales. A typical salon offers haircutting and styling, coloring, shampooing, and permanents. Some salons also offer nail care, facial treatments, makeup, bikini waxing, massage, tanning, and other types of spa treatments  but the lower volume of demand for such specialty services often makes them uneconomical. Sales of hair care products are an important revenue source for many salons, providing from 5 to 15 percent of revenue. Gross margins are higher for hair care products than for services. 

A typical salon occupies about 1,000 to 1,500 square feet and is located in a mall or strip center.

The following Beauty Salon market research report summary is from IBISWorld which also sells a full version of this report.

- Revenue growth is expected to improve over the next five years, rising at an average annual rate of 3.2% to $58.7 billion by 2019. This will be driven by increases in per capita disposable income and declining unemployment over the five-year period. Higher disposable incomes will also lead hair salon customers to spend more on higher-value services such as manicures, pedicures, facials, hair modification treatments, and massages.

- Industry profit is also expected to see gains which could encourage more new businesses to enter the industry. Profits have increased from 1.9% in 2009 to 5.7% in 2014. Continued profit gains will be mainly due to increased sales of higher-value products which have larger profit margins. Improving market conditions continue to increase the number of industry operators at an average annual rate of 5.5%, reaching 1.3 million operators by 2019.

- This growing number of industry operators will drive employment growth. The improving job market will continue to contribute to higher enrollments at cosmetology schools. This continued trend, combined with the growth in new industry operators, has driven beauty salon employment upwards at an average annual rate of 3.8%, reaching 1.7 million employees in the five years to 2014.

Hair Salon Licensing Requirements

• Information on Hair Salon, Beauty Salon and Barber Shop business licensing requirements in your local area.

It’s hard to tell how much exactly an owner might spend on the starting equipment. This kind of business is too wide. One can spend thousands of dollars on the latest technologies to offer something more than just hair coloring, while another won’t buy anything but a shower. That’s why the costs for hair salon equipment may range from $0 (only booth rental will be paid) to $32,000 at a franchise. The cost depends on the type of hair salon, number of sits and suggested services.

The equipment for simple hairdressing hall includes:

Nails care equipment:

• A special table for manicure;
• Chair;
• Hood;
• Sink with hot and cold water;
• Sterilizer;
• Basket for soiled linen.

The question of raw materials costs for the beauty salon is rather subjective because of their range. While some elite salons spends few thousand dollars on Italian natural cosmetics and hair care, other can invest only $100 per month.

On the whole, one will need to purchase:

• a set of linen (towels, set of towels, robe) - $99;
• 4 styling comb sets – up to $20 per set;
• 4 hair-cutting scissors – up to $15 per unit;
• 2 hair trimmers (clippers) – around $30 per one;
• Three brush sets - $10 per each;
• hair razors - $5 per unit;
• a handy hairdryer - $30 - 40;
• shampoos – it depends on the manufacturer;
• liquid for hair dyeing – see above;
• balms and fluid for after-wash treatment;
• fluid for curling and hair styling.

On the whole, raw materials for this type of business are very cheap, so don’t worry about the expenses for this part.

To rent a booth, you will need to invest about $1,000. Insurance, utilities and the business license for the establishment are already included into this price, so don’t worry. No matter if your hair salon is run as a a sole business or a franchise, you’ll have to pay rent, insurance, deposits and utilities. Thus, all fees can range up to $10,000. An attorney can be demanded for negotiating or reviewing the lease contract or franchise agreement. It will result into additional hourly cost from $250 an hour or more.

The constant temperature in the salons is about 18 - 20 degrees C°. In the summertime, this temperature is generated by the ventilation, in wintertime - the heating system is involved. Most of the beauty salons have the central heating system (water or steam one): the radiators or heating batteries are used. The presence of such elements as heat, moisture, a lot of gaseous products causes the need for setting up the forced ventilation system when the number of working sits is at least three. In accordance with the sanitary norms and standards, the hairdressing salons with no less than 3 working sits must be equipped with the input ventilation; when the number exceeds 10 – with the supply-and-exhaust ventilation; for more than 20 working sits – with the conditioning and air heat system. As for the salons located in the residents, ventilation systems should be set separately from the building ventilation (for instance, in the basements with excellent sound insulation). The walls of salon’s premise is preferred to be in a light color (white, pink, beige, yellow) and of easily washable material. The floor should be smooth and cracks-free. The staff is obliged to undergo a medical examination once in 6 months.

The quality of work and staff’s state of health depend on the appropriate lighting system. The best alternative is a natural light. The area of the window holes must be no less than 20%, the distance from the window to the opposite wall should not exceed 7 meters. Beauty salon management must install a protective shield outside the window for the direct sunlight defense. The special shutters also can be applied. Late evening work needs some artificial lighting. The sources of artificial light have to be protected via shades of matte glass or any other material capable of diffusing the luminous flux. Each workplace has to be provided with a local lighting (like with the wall sconces, set at a distance of 1.8-2 m from the floor).

According to current legislation, you have the right to employ only professionals whose level is confirmed by the diploma of corresponding discipline. To prove their skills, the related certificates can and should be placed within the workplace. It adds up to overall salon’s credibility.

The state average has to include:

1. Administrator/owner/operator - 1 person;

2. Salon manager – 1 person;

3. Hair stylists – 2 - 4 persons;

4. Nail care professionals - 2 persons;

5. Skin care professional - 1 person;

6. Cleaner - 2 persons (one per shift).

You may prefer one cosmetologist instead of few nail care professionals along with skin care experts. Beauty salon professionals usually gain $17,000 - $22,000 annually (median income).

To sum up, here are the basic staff requirements:

1. Special education, confirmed by a diploma.
2. Experience for middle and top salons is a must.

Beauty Salon Employment Trends

Here is a Beauty Salon labor market summary from the Bureau of Labor Statistics.

Pay

In May 2012, the median hourly wage for barbers, hairdressers, and cosmetologists was $10.95. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less.

Median hourly wages for occupational specialties in May 2012 were as follows:

• $12.06 for barbers
• $10.91 for hairdressers, hairstylists, and cosmetologists

Many barbers, hairdressers, and cosmetologists work part time. However, some self-employed workers have long hours. Work schedules often include evenings and weekends?the times when beauty salons and barbershops are busiest. Those who are self-employed usually determine their own schedules.

Work Environment

Barbers, hairdressers, and cosmetologists held about 663,300 jobs in 2012. Nearly half were self-employed.

Employment in the detailed occupations that make up barbers, hairdressers, and cosmetologists was distributed as follows:

• Hairdressers, hairstylists, and cosmetologists: 611,200
• Barbers: 52,100

Barbers, hairdressers, and cosmetologists work mostly in a barbershop or salon, although some work in a spa, hotel, or resort. Some lease booth space in other people’s salons. Some manage salons or open their own after several years of experience.

Barbers, hairdressers, and cosmetologists usually work in pleasant surroundings with good lighting. Physical stamina is important, because they are on their feet for most of their shift. Prolonged exposure to some chemicals may cause irritation, so they might wear protective clothing, such as disposable gloves or aprons.

Work Schedules

Many barbers, hairdressers, and cosmetologists work part time. However, some self-employed workers may have long hours. Work schedules often include evenings and weekends?the times when barbershops and beauty salons are busiest. Those who are self-employed usually determine their own schedules.

Job Outlook

Overall employment of barbers, hairdressers, cosmetologists, and shampooers is projected to grow 13 percent from 2012 to 2022, as fast as the average for all occupations. Growth rates will vary by specialty.

Employment of barbers is projected to grow 11 percent from 2012 to 2022, as fast as the average for all occupations. The need for barbers will stem primarily from an increasing population, which will lead to greater demand for basic hair-care services.

Employment of hairdressers, hairstylists, and cosmetologists is projected to grow 13 percent from 2012 to 2022, about as fast as the average for all occupations. Demand for hair coloring, hair straightening, and other advanced hair treatments has increased in recent years, a trend that is expected to continue over the coming decade.

Job Prospects

Overall job opportunities for barbers, hairdressers, and cosmetologists are expected to be good. A large number of job openings will stem from the need to replace workers who transfer to other occupations, retire, or leave the occupations for other reasons. However, workers should expect strong competition for jobs and clients at higher paying salons, of which there are relatively few and for which applicants must compete with a large pool of experienced hairdressers and cosmetologists.