(Assume for this analysis that you use the commission-based approach the percentages change dramatically in the booth model.)Īs for other ongoing expenses, they include your stylists' share of payroll taxes, 7.6% of sales (health insurance and other fringe benefits are uncommon) rent and property taxes (from 3% for a remote location to 10% in a well-trafficked mall) supplies, between 2% and 8% marketing and advertising, 2% to 5% maintenance, 3% and insurance, 2%.įinally, if you want to stay on the cutting edge, you'll need some sort of in-house training program. Expect these staffing costs to snip off around 10% of sales. You'll need support staffers, too: hair washers, appointment takers, stylists in training and someone to watch the books. (Some stylists like this model better because they don't have to wait every two weeks to get paid.) Here, the salon owner acts as a landlord, charging stylists a certain amount of "rent" each week to use a chair. The second option is the "booth rental" model. "If you're paying more than 50% in commissions, you're not making any money," says Cary O'Brien of the eponymous St. For example, a stylist might keep 40% of the first $1,000 she brings in per week, and 5% more for each additional $1,000. Some salons use a graduated commission scale to encourage stylists to lure more customers. Commissions typically range from 35% to 60%. In the commission-based model, each stylist receives a percentage of what he or she brings in. You can compensate stylists one of two ways. ![]() Once up and running, your biggest expense is people. And don't forget the operations software and supplies. Expect to slog through six to nine months before operating at full capacity with stylists, hair washers and secretarial staff. You will probably eat several months of rent while getting set up. Super high-end salons in ritzy ZIP codes might gobble up to $300 a square foot in start-up costs. Fitting out a space from scratch will run between $75 and $125 per square foot, depending how stylish the design. ![]() To fit that many chairs, you'll need at least 1,000 square feet. ![]() Still, there are economies of scale in this business, so a good bet is to have at least five or six chairs (and the same number of stylists). Smaller beauty salons with marquee stylists can make good money with only a handful of chairs. How much will I need to shell out in start-up costs and ongoing expenses?
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