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The salon industry has seen tremendous growth in recent years. With that growth has also come a potential for salon owners to make strong incomes. Analysts estimate that the average salary for salon owners, as of February 2023, is $51,163, and a few owners even exceeded six figures. A closer examination of what goes into those figures reveals the complexity and diversity of the salon industry and the potential for both small and large earnings within it.
- Salon owners make a little over $50,000/year, on average.
- Salon owners must factor in operational costs such as rent, staff wages, and supplies.
- Building a strong clientele base is key to higher profits as a salon owner.
Is Owning a Salon Profitable?
If done right, of course owning a salon can be profitable. It’ll take hard work, dedication, and an understanding of the market. Running a salon also comes with a lot of upfront costs that’ll offset your profit as a salon owner, including:
- Employee salaries.
- Marketing costs.
- Other business expenses like POS systems.
And that’s just a short list. There may be other expenses that come up.
How much does an independent salon owner make?
In general, an independent salon owner can expect to make about $51,000 each year, according to Salary.com. Opening your own salon comes with more freedom than owning a franchise, but you’ll get less support and you’ll be responsible for every facet of your business.
How much do nail salon owners make?
Nail salon owners make similar salaries to hair salon owners, earning between $40,000 - $75,000 per year. These salons focus on nail painting and styling more than on hair or spa services.
How much do salon suite owners make?
According to Suitefinder, a salon suite owner makes more than $100,000 per year. A salon suite is a salon where other stylists rent out space to run their businesses. This helps the owner make money from rental fees and helps stylists keep their overhead low.
How much do hair salon owners make?
Hair salon owners make $74,699, on average. This is opposed to nail or beauty salon owners. Hair salons, as their name implies, focus exclusively on barbering or hair styling.
How much do spa owners make?
Spa owners make a hefty profit of about $108,000 per year, according to Glassdoor. Spas are entirely different from other salons, offering services such as massage, body masks, salt scrubs, mud baths, and more.
Salon Earning Potential and What Affects It
Earning potential refers to the maximum amount of money one can potentially make from their business endeavors. For salon owners, that usually means the income they can earn from running a successful salon.
The earning potential of a salon is ultimately dependent on factors such as:
- The location of the salon.
- The services provided.
- The staff employed.
- Marketing strategies.
- The overall quality of service.
These factors, in combination with the market demand, will dictate how much revenue a salon is able to obtain.
In addition to these core elements, the beauty industry offers unique considerations that impact a salon's earning potential. Some of the most important factors to be aware of include the current trends and demands of the beauty industry, the level of competition in the local area, the average prices charged for services, and the loyalty of current clientele.
What Are The Hidden Costs of Running A Salon?
Owning a salon is a lucrative business, however, before you jump into it, it's important to be aware of the hidden costs associated with it. One of the biggest expenses you'll face is the cost of renting or buying the space to house your salon. Depending on the location, whether you decide to lease or buy, and the size of the salon, the cost of rent or mortgage payments can be very high.
In addition to property costs, you may also be faced with salon equipment and furniture expenses. Depending on the size of your salon, you may need to buy shampoo bowls and chairs, hair dryers, and styling stations, as well as other salon products.
Here are some other hidden costs of operating a salon:
- Insurance. To cover yourself and your business from potential claims and damage, you will have to pay for insurance.
- Marketing. Your salon won't do well without proper marketing. You will need to budget for any advertising and marketing initiatives.
- Licenses and permits. To legally operate your salon, you'll need to obtain the necessary licenses and permits.
- Utilities. You will be responsible for any and all electricity, water, and internet bills associated with your salon.
- Payroll and taxes. In addition to employee wages, you’ll need to set aside money for payroll taxes and state taxes.
To cover all of these expenses, you may want to consider beauty salon loans or salon equipment financing.
How to Pay Yourself As A Salon Owner?
As a salon owner, you need to have a formula to determine how much money you should pay yourself as your salary. It would be easy to pay yourself based on how much profit the business is making, but this could be harmful to the success of the business in the long run. Here are the basic steps of paying yourself first:
- Figure out your monthly expenses. This includes things like rent, utilities, advertising, and employee payroll. You should also include the cost of purchasing new equipment and any other miscellaneous expenses. After you have completed this analysis, it is important to include your own salary as an expense. You should calculate the salary based on the market rate for a professional in your geographic area and industry.
- Identify the profit margin you’re aiming for. As a salon owner, this profit margin should be enough to sustain the business and yield a decent return. To calculate your profit margin, subtract your total expenses from your total sales. This will tell you how much money you have left to pay yourself and invest in the business.
- Make sure the salary you choose allows you enough money for retirement, taxes, and other expenses. Ultimately, the goal should be to ensure that you are able to maintain a standard of living that you are comfortable with.
- Make sure you stick to the plan. You should track your monthly expenses and revenue so that you can accurately gauge your business’s performance. This will also give you insight into whether or not you are paying yourself too much or too little.
By consistently following this formula, you can make sure that you pay yourself a fair salary while making sure that your business is profitable enough to sustain its growth.
Ways to Minimize Salon Expenses
Being a salon owner is demanding and profitable if done correctly. It's important to look for ways to minimize expenses, as this can free up more money for you and your employees. Here are a few effective strategies to optimize your budget:
- Take advantage of discounts. Seek out discounts from suppliers, as any additional savings can help your business grow.
- Control inventory. Order only the products you need. Unnecessary items can add up fast.
- Utilize technology. Invest in online appointment booking software to make it easier for your customers, and to save on staff labor costs.
- Invest in energy-efficient appliances and lighting. Having eco-friendly options can help you save on monthly utilities.
How Can Salon Owners Increase Their Earnings?
As an owner of a salon, you’re the master of your own destiny and have the potential to increase your earning. There are many creative ways to do this. Below are some potential methods for salon owners to increase their earning potential:
- Sell exclusive products. Make a name for yourself by offering exclusive, high-quality products that you can't find anywhere else. This will give customers an incentive to come back to your salon for the best products and services.
- Run master classes and workshops. Consider offering master classes and workshops to attract new customers and teach them the best practices and techniques in the industry.
- Rent out extra salon space. Consider renting out extra space in the salon to other stylists, massage therapists, or nail technicians. This will not only bring in more money but also give customers additional services.
- Increase prices. If you have been in business for a while, you may need to consider increasing prices in order to keep up with the market rate.
- Offer group discounts. Offer money-saving discounts to groups of friends and family. This will encourage people to come back regularly and promote word-of-mouth marketing.
- Create loyalty programs. Create loyalty programs to reward customers for purchasing services and products from your salon. This will create repeat business and help build customer loyalty.
- Advertise. Utilize social media, print advertising, and other methods to reach new customers and promote your brand.
The Best Paying Cities for Salon Owners
There are certain cities that are going to pay better than others, based on many different factors. ZipRecruiter has a list of the top 10 cities, including:
- San Mateo, CA - $64,585
- Green River, WY - $62,829
- Richmond, CA - $60,449
- Stamford, CT- $59,717
- Brooklyn, NY - $59,029
- Bellevue, WA - $59,009
- Belgrade, MT - $58,820
- Santa Clara, CA - $58,268
- New Haven, CT - $58,058
- San Diego, CA - $57,514
Finance Management Tips for Salon Owners
As a salon owner, proper financial management is essential to the success of your business. To ensure the best results, take the time to become knowledgeable about managing your finances effectively. Here are some key tips to help you do just that:
- Establish a budget and stick to it. Your budget should include all costs associated with owning a salon, such as costs for supplies, rent, utilities, payroll, and taxes. Once you have a budget in place, monitor your income and expenses closely to ensure you’re staying within it.
- Monitor and control cash flow. Good cash flow management is critical to your success. Track expenses closely, be sure you’re collecting payments from clients promptly, and make timely payments on outstanding debts.
- Maintain accurate financial records. Record-keeping is key to a well-run business. Make sure you keep accurate records of your transactions and keep them up-to-date. This will help you spot trends and potential problems before they arise.
- Minimize expenses. Find ways to reduce your costs, such as cutting back on unnecessary supplies or renegotiating rent or other payments.
- Implement business management tools. Use software tools to help you monitor and manage your finances more efficiently. These tools can save you time and help you identify problems sooner.
While salon owners have an opportunity to make a good living, there is no one-size-fits-all answer to how much they make. A salon owner can make a great deal of money, or very little, depending on a variety of factors. Setting achievable goals, understanding the risks, and being prepared for challenges can help salon owners earn a steady income. With the right combination of dedication, skill, and effort, turning a passion for beauty into a profitable career is not out of reach.