Editor's note: This article was excerpted from our Salon or Day Spa start-up guide, available from Entrepreneur Bookstore.
Since the dawn of the new millennium, the stock market has been in a freefall and the economy has been in the doldrums. But it was a good time to start a hair salon and day spa--and it still is today.
According to Modern Salon/Vance Publishing, total salon industry revenue is predicted to be $3.4 billion in 2005, up 11.8 percent from 2002. How is it possible for a service sector like the beauty industry to continue to grow, given the state of the economy? No doubt because many of the services offered by salons simply cannot be duplicated at home--or at least not duplicated well. In addition, in an age where people freely shell out $59.95 a month for unlimited cellular service or hundreds of dollars to lease the latest SUV model with the most bells and whistles, the price of a haircut probably doesn't seem very high considering the lift it can give your spirits. Also, the baby boomers, who now constitute the largest population segment in America, are more than willing and are financially able to spend money on any personal care service they perceive will make them look younger and more attractive.
What all this prosperity means to you is that the prospects for people who own personal care businesses are bright. The 2003 Job Demand Survey, distributed by the National Accrediting Commission of Cosmetology Arts and Sciences, indicated that average total income (including tips) for salon owners was $53,150 in 2002, although it's possible to earn much more depending on where and how you do business.
(And just as a side note: When we say "salon" throughout this article, we mean salon and day spa, as the title of the start-up kit indicates. Since the tools necessary to open both are basically the same, it seemed redundant to say "salon/spa" over and over.)
There are three ways you can make your mark on the hair industry. You can open a franchise hair salon, in which you pay money upfront for the privilege of opening that salon using someone else's established name (which gives you an instant reputation) and its resources (like advertising campaigns). You can buy an established salon from someone who is retiring from the business, has tired of the business, or has damaged the business and forced it into bankruptcy (all three happen every day). A third option is to establish your own salon using your own money, your own ingenuity and your own optimism that hard work and talent will win out.
There's one more option that bears mentioning here because it's so prevalent in the beauty business. Booth rental salons are owned by a person (or persons) who is basically the landlord for a group of hairstylists and other service providers working under his or her roof. As the landlord, the salon owner/operator collects a flat monthly fee from the service providers, for which they have the privilege of using salon space and nonremovable equipment like a styling station and chair. The renters, in turn, are considered independent contractors who must provide their own supplies (everything from hair dryers to perm rods), set their own hours, book their own appointments and have their own key to the building.