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How to Open a Tanning Salon

Overview

How to Open a Tanning Salon

If you’re looking for a business opportunity that allows you to put your passion for the beauty and skin health industries to use, then opening a tanning salon may be an appealing option. As the owner of a tanning salon business, you’ll be able to help clients look and feel their best on a daily basis. With a little marketing talent and some creativity, you can make your salon into a profitable business.

Business Overview

Tanning salons offer a variety of services, including indoor tanning and spray tanning. Salons typically offer tanning services by appointment, though some may take walk-ins. Some salons sell more than just tanning services and may offer accessories like sunglasses, skincare products, and even bathing suits. Tanning salons often depend on repeat business throughout the season, so establishing relationships and positive experiences for customers is important.

A tanning salon can give you control of your own business and some independence, too, but starting a salon is no small undertaking. Salons require significant startup costs because of the cost of the equipment that you’ll need.

Cleanliness and maintenance of the equipment should be a high priority for every tanning salon. This helps the equipment last longer, and customers will go elsewhere if they see dirty or broken beds.

Industry Summary

The tanning salon industry has undergone steady growth during the past five years. According to IBIS World, from 2014 to 2019, the industry grew by 5.2 percent. The number of tanning salon businesses has increased to 9,462 salons, and the industry is predicted to bring in $4 billion in revenue in 2019. As the number of salons has increased, industry employment has also grown, and today 59,483 people are employed within the tanning industry. No companies have major market shares in the United States.

The growth within the industry is related to the increased employment and improved economy that we’ve seen from 2014 to 2019. As more people are employed in better-paying positions, they have more disposable income and choose to spend that income on luxury products and services, like tanning.

While tanning use has increased, the tanning industry does face a threat from regulatory groups like the Food and Drug Administration. These groups are working to increase public education about the dangers of indoor tanning. This increased education can cause customers to be concerned about indoor tanning and even avoid it entirely. Tanning salons will need to be able to evolve with customer demands for safer tanning options, like spray tanning.

Industry Trends

According to Ist Magazine, the tanning industry is becoming more focused on providing customers with an experience than simply providing a service. Besides using the latest tanning beds with the best technology, salons need to offer more customized experiences to customers. This can involve everything from providing different skin care choices, a selection of UV light options tailored to the customer, and even different music selections. When salons can give customers a positive experience, customers are more likely to see the brand in a positive light and return again for future tanning sessions.

Artesian Tan also predicts that spray tanning will continue to grow in popularity, and social media will play an important role. Because social media allows people to engage directly with brands and post photos showing off the results of a salon visit, salons will need to master their social media marketing and encourage customers to post about the brand on social media.

Target Market

The target market for a tanning salon can vary according to a salon’s location and branding. In most instances, tanning salons target adult women (18-60) who value their appearance and who have enough disposable income to afford tanning services. College students and, on occasion, high school students may also be part of the target market, depending on state regulations allowing this age bracket to use the equipment legally.

Checklist for Starting a Tanning Salon

If you’re thinking about starting your own tanning 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 the idea, the next step in starting your business should be to write a business plan.  Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business since it forces you to look at key aspects of the business like who the competitors are and what you do better, marketing and financial analysis.

Related: Sample tanning salon 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 tanning 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: Name the Business

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

Related: Tips and ideas for naming a tanning salon

Step 4: Select your Location

Locating a tanning salon in a premium, high-traffic space can be expensive; however, it may be worth the additional cost in terms of the walk-in traffic and overall business awareness the location offers.  A good tanning salon would ideally be located close to complementary businesses, such as a fitness facility (that doesn’t offer tanning), nail salon, or spa, and offer close and ample parking.  Malls and other busy shopping areas also typically make for a good location.

Lease costs will vary according to a property’s size, location, and any modifications that need to be made. Renovating an existing commercial space to accommodate a tanning salon can be very expensive since electrical wiring will need to be altered to power tanning beds and a very powerful HVAC system.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

Some states require tanning salon owners to obtain training, tanning certification, and/or to pass a state-administered test – see state tanning requirements.  Additionally, most states have regulations restricting or prohibiting minors from using tanning equipment which is expected to increase.

In addition to any tanning-specific requirements, there are also general business registrations such as a business license, sales tax permit, Employer Identification Number, and Occupancy Permit, among others.

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 tanning salon is another.  Funding to start a tanning salon can be difficult due to the cost of equipment and building renovations.  In order to get a small business loan, the borrower(s) will need to have good credit and be able to personally invest 15-25% towards the total start-up 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 Plan in Place

A tanning salon will depend on marketing to bring in new customers and encourage existing customers to return. Common strategies include using Facebook, Twitter, and Instagram for social media marketing, print advertising, radio advertising, Groupon (or other local discount sites), and even the development of a loyalty rewards program.

Tanning salons that offer excellent service and equipment will see word-of-mouth recommendations be a major driver of new 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 Canvaa logo maker!

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a tanning salon. A few of these include:
– General liability insurance protects the salon in case a customer is ever injured while at the business, such as by tripping while in the salon or experiencing a skin reaction to salon products or treatments
– Commercial property insurance covers damage to the salon’s equipment or to the building itself, in case an event like fire ever occurs
– Worker’s compensation insurance is required if a salon has any employees. This coverage goes into effect if an employee is ever injured while at work, and it can pay for expenses like medical bills or lost wages.

The cost to insure a tanning salon will be affected by the size of a salon, its location, the number of employees on staff, and the value of the salon’s equipment. To get the most accurate idea of what insurance will cost, request quotes from multiple insurance companies. Then, look at factors like deductibles, premium costs, coverage limits, and coverage exclusions to determine which policy is best for a salon.

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

Step 10: Hire Employees

While a salon owner may be able to staff a small salon on their own, the long hours will make it difficult to maintain this on a long-term basis. Most tanning salons will need at least a few employees. According to PayScale, tanning salon receptionists make an average of $12.57 per hour or $32,067 per year.

In addition to budgeting for employee salaries, hiring employees means that a salon needs to be prepared for other related expenses like unemployment insurance, Social Security contributions, and paid time off.

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 tanning salon?

The cost to start a tanning salon depends on factors like the salon’s size and whether the salon will feature tanning beds or spray tanning. Plan to spend at least $150,000 on starting a tanning salon, though costs can be closer to $300,000 when establishing a larger salon or when purchasing top-quality tanning beds and equipment.

– Tanning beds
– Spray tanning booths
– Renovations so that the building can support the electrical use of equipment
– Furniture for the waiting room and reception area
– Shelves for retail product
– Waiting room and changing room furniture and decor
– Supplies like towels, lotions, and eye protection
– Signage
– Working capital to cover the first few months of payroll, rent, utilities, etc.

How much can a tanning salon owner make?

The income generated by a tanning salon depends on many different factors, including the number of tanning beds or spray tanning stations it has, the salon’s location, and its years in business. Indeed.com reports the average income for a tanning salon owner to be $30,000, but remember that this will vary from business to business.

It’s also important to realize that tanning is largely a seasonal activity, with salons seeing most of their business in the spring and early summer. Budgeting and planning to keep the salon operational all year long will be important, but many salon owners successfully navigate the industry and have successful businesses.

What skills are needed to run a tanning salon?

While opening a tanning salon doesn’t require a business degree, there are certain skills and experiences that are valuable to have in this industry.
Knowledge of tanning and skincare. With more customers becoming concerned about the potential health effects of tanning, any salon owner will benefit from a knowledge of tanning and skincare. Being able to discuss skin health with customers and offer well-informed tips and advice can build customers’ trust in the business.

Customer service experience. The ability to engage with customers and make them feel welcome and appreciated is important in tanning salons. Customers are increasingly valuing the experience that tanning offers, so personable business owners can create meaningful connections with customers, encouraging them to become returning customers.

Attention to detail. Small details can have big implications in a tanning salon setting. Not only is attention to detail important for the customers’ safety, but focusing on the little details that contribute to a salon’s atmosphere can make it a more pleasant and enjoyable space. These small improvements can help to drive tanning sales and earn returning customers.

Marketing skills. Marketing a tanning salon takes some skill, but even basic marketing skills will help a salon owner raise awareness of their salon. The more marketing a salon owner can do themselves, like placing print advertising and creating social media accounts, the more they’ll be able to save by only hiring a professional marketer to take care of more complicated tasks.

Are there grants to start a tanning salon?

It’s extremely rare to find a grant to start a tanning 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 tanning salon?

The NAICS code for a tanning salon is 812199.

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:
American Suntanning Association

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