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How to Open a Nail Salon

How to Open a Nail Salon

If you’re looking for financial independence and a rewarding career where you get to interact with people and help them look their best, then owning a nail salon might be the right option for you. This guide on how to start a nail salon can help you understand what startup costs you’ll face, what skills you’ll need, and the steps you should take to prepare to ensure your nail salon is a success.

Nail Salon Overview

Nail salons cater to a variety of audiences and offer scheduled appointments and/or walk-ins. Because many clients return repeatedly, nail salons can quickly build up a recurring clientele. From pedicures and manicures to detailed nail art, nail salons offer a variety of beauty and nail care services.

Before you start your own nail salon business, do some local market research. Look at where competitors are located and assess whether there’s a need for an additional salon. Is there some unmet need or opening in the market you could fill?

Industry Overview

The nail service industry is a thriving market. According to Nails Mag, in both 2016 and 2017, Americans spent $8.53 billion on nail services. That figure represents a significant increase over the $8.28 billion that the industry brought in during 2013.

In 2017, 56,386 nail salons were operating in the United States. Basic manicure prices averaged $20.93, basic pedicures averaged $33.56, and gels averaged $29.41 as of 2017. Some of the most common services offered at nail salons include manicures and pedicures, gel polish, nail art, acrylics, and hard gels.

Industry Trends

The fashion and nail industries are continuously evolving, so your nail salon will need to stay up to date with the latest trends and fashion to meet the demands of your clients. According to Beauty Packaging, one of the latest trends is nail art and intricate designs. We’ll probably see additional types of nail polish and nail treatments emerge over the next few years. Being able to embrace and offer these new trends quickly can keep your nail salon ahead of the competition.

We’re also in the middle of a movement toward healthy, organic, environmental-friendly products. As consumers continue to focus on healthier options and sustainability, we may see more and more clients looking for eco-friendly nail salons and offering healthy, safe products and nail care.

Another trend is toward mobile nail salons, where the business goes to the customer.  A mobile nail salon is more convenient for the customer and will usually cost less to start than operating out of a retail location. Mobile salons may target workplaces or even special events like parties.

Target Market

Your nail salon’s exact target market will depend on your business model, services, and location. For instance, a high-end salon will probably market to affluent clients in the community and won’t market to children or teens.

Generally speaking, though, nail salons primarily market to local women. Depending on your salon, you may wish to target the budget or economy market, the intermediate or midsection of the market, or the luxury and top end of the market. The sooner you can determine the market that’s right for your salon, the better you can cater your services and your marketing to reach those clients.

Checklist for Starting a Nail Salon

If you’re thinking about starting your own nail salon, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.

Step 1: Write a Business Plan

After coming up with an idea, the next step in starting any business should be to write a nail salon business plan. Working on the business plan will have you get quotes on rent, insurance, and more to create a detailed budget and calculate your exact startup costs. Find out how many customers it will take to cover all of the costs and provide enough profit to make this business worth all the time you are about to put in.

Not only will a bank require you to have one in order to get funding, but multiple studies have shown that a business plan helps increase the odds of starting a successful nail salon business.

Related: How to write a business plan

Step 2: Form a Business Entity

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a nail salon, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 3: Choose a Business Name

Finding the perfect nail salon name can be challenging. Not only does the business name have to resonate with your customers, but it also has to be available to use.

Related: Tips and ideas for naming a nail salon

Step 4: Select your Location

When you’re just starting up a nail salon, the cost of acquiring space can be expensive. It’s important to be located in close proximity to high-traffic areas such as shopping centers as walk-ins make up a large portion of sales. Rents in prime locations tend to be more expensive but are usually more desirable as there is more traffic and visibility. You’ll probably at least start out leasing a location rather than buying or building outright, and lease prices vary depending on location, size of the space, and more.

If you’re looking to save money, you could look at renting space within an existing business, such as a hair salon that doesn’t offer nail services or a booth at a mall. The upside here is that you have access to an existing pool of customers who already spend on beauty, and many will be willing to try your service.

Related: Choosing a business location

Step 5: Register for Business Licenses and Permits

The types of business licenses, permits, and registrations that will be required to start a business vary on the activities of the business in addition to where it is located.

While not a license on the business, each state requires nail technicians to have a cosmetology license in order to offer these services. Be sure to contact your local health department to determine their policies for nail salons and their staff.  In addition to licensing, most states also require regular inspections to ensure safety standards are being met.

As the salon owner, you’ll also need to look into other local and state business licensing and permits that may be required locally. Some of these include a business license, sales tax permit, Employer Identification Number, and Occupancy Permit.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a nail salon is another. Fortunately, the cost to start a nail salon can be relatively low, with most of the costs going towards the stations, furniture, signage, and inventory. Funding for a new start-up can be difficult as banks typically want the borrower to have good credit and personally invest 15-25% towards total project costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Ready

Now that you are getting close to opening, it’s time to get marketing materials planned and created. It’s important to understand your market and what media they consume so you can effectively reach out to advertise and let them know you’re open.

Getting mentions from your customers via social media such as Facebook, Instagram, and Pinterest, is very effective at bringing in new clients and managing online reviews such as Google and Yelp. Additionally, loyalty programs will tend to encourage repeat visits from your existing clients.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Obtain Business Insurance

There are several types of insurance to consider when starting a nail salon. A few of these include:
– General liability insurance helps cover the legal costs you may face if a customer is injured in your salon (such as a trip and fall) and sues.
– Property insurance can cover the cost of your equipment or building if there’s a fire or burglary. Most policies exclude coverage for earthquakes and floods, so if you live in an area prone to these disasters, you will want to carefully examine your policy and make sure you find the coverage that’s right for your business.
– Workers’ compensation is required in all states. This insurance covers medical costs or lost wages if employees are injured while doing their jobs.

The cost to insure a nail salon will according to factors including your business size, the value of your equipment and building, and even the state you operate in. When shopping for insurance, request quotes from multiple companies and compare the policies and coverage to find the best plan for your needs.

Related: What types of insurance does a nail salon need?

Step 10: Hire Employees

Wages are typically the largest cost for nail salons, so it’s important to manage employees well to protect profits. Depending on how large and busy your nail salon is, you may need to hire a salon receptionist (salary range of $22,000 – $30,000), a licensed nail technician (salary range of $20,730 – $27,040), and potentially even a salon manager (salary range of $24,000 – $52,000). Expect to pay salaries for part-time and full-time employees. Additionally, you’ll need to pay taxes for your employees, and you may offer other perks like paid time off, sick leave, health insurance, and more to your full-time employees as an incentive for them to stay with you.

Keep in mind that salary ranges will partially depend on the cost of living in your area and what comparable positions in other salons pay.

Instead of hiring nail techs, many nail salons will charge booth rent to their techs. Be sure to understand your state’s rules for bringing on contractors to stay out of trouble.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a nail salon?

When planning your new nail salon, you’ll need a detailed understanding of the costs of starting a salon business. You may need to save up money for your startup costs, find investors, or write a business plan and apply for a business loan to fund some of the larger common costs to start a nail salon business including salon chairs and manicure stations, ventilation system, waiting area furniture, reception desk, scheduling software and point of sale system.

An assortment of supplies will be necessary, such as polishes, acrylic powder kits, acetone, cuticle oil, lotions, nail clippers, buffers, and towels to perform the services.

How much can a nail salon owner make?

Concrete data about the average salary for nail salon owners is difficult to find. Because the nail salon industry is largely a cash industry, income may be under-reported. A nationwide study of the salon industry from the Professional Beauty Association estimated that nail salon owners made about $48,700 per year, while non-owners took home about $36,300.

Many factors will influence how much you could make owning a nail salon. Your location and the average rates for nail services will partially determine how much you can charge for your services. The services you offer will also influence profits as you can focus on manicures and pedicures, but add-on services like nail art or massages can bring even more profits. Overhead factors, like your rent or lease, will affect your profits. Local competition may also affect your income, which is one reason why it’s important to carefully research any location you’re considering for your salon.

In addition to nail salon equipment and supplies used during the appointment, you may also want to purchase inventory to sell to customers. This is a great way to generate additional profits from existing customers. The typical average markup for retail items is 100%.

Some of the more popular items include; lotions, nail polish remover, nail care kits, gloves, and sandals.

What skills are needed to run a nail salon?

To successfully run any small business, you’ll need some business knowledge, marketing skills, and management abilities. When it comes to running a nail salon, these specialized skills and experiences will be helpful.

Education. All states require nail technicians to have a cosmetology license. Typically, this license requires a high school diploma or GED.

Cosmetology experience. If you’ve attended cosmetology school and are a licensed cosmetologist, you’ll better understand the challenges and skills associated with providing services in your salon. You’ll also have an idea of the typical costs associated with the services, the equipment you’ll need, and what responsibilities you can reasonably expect your employees to take on.

People skills. You’ll need to be able to build relationships with your employees and your clients, so a focus on customer service that provides warm and welcoming nature can give you an advantage. The ability to make small talk during appointments is also a plus.

Problem-solving skills. As a business owner, you’ll face challenges as you start up and run your salon. Creativity and excellent problem-solving skills will help you cope with whatever challenges come your way.

An eye for trends. The nail and beauty industries evolve quickly, and if you offer the latest nail trends, you can bring in new clients. The ability to stay on the cutting edge of the industry and spot new and evolving trends can help your salon attract clients and then keep them coming back again and again.

Training capabilities. As you bring on new staff, you’ll need to be able to train them in your salon’s policies and approaches. Besides training skills, the ability to give and receive constructive feedback can make you a better manager.

Are there grants to start a nail salon?

It’s extremely rare to find a grant to start a nail salon. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a nail salon?

The NAICS code for a nail salon is 812113.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Resources:
Association of Cosmetology Salon Professionals
American Beauty Association
International Salon Spa Business Network
Professional Beauty Association
Salon Spa Professional Association

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