Data from the U.S. Bureau of Labor Statistics concludes that about 20% of small businesses fail within their first year and roughly 50% fail within their first five years. The number-one reason small businesses fail: lack of capital or funding. Estimates are eight out of 10 new businesses will fail because their revenue (money taken in) will fall short of their expenses (money going out to sustain the business).
What you don’t see within these statistics is the downward spiral of people’s personal lives, complete with sleepless nights, tears, frustration, and shame due to failure. And it’s not just the salon owner who can be affected. Spouses and family members feel the pressure too, as chronic stress and financial difficulties take their toll.
So why gamble with your future by borrowing money when you really don’t have to?
Start Small, Pay Cash
It’s far less risky to start off small without borrowing money and grow larger incrementally as your business increases. If you dream of owning your own nail salon, start now by putting aside a little money, bit by bit, into a specific bank account just for that purpose. There are immediate ways to gain more money, such as taking leftovers for lunch ($5-$10 saved daily) and skipping Starbucks ($3-$5 saved), plus eliminating cable TV (around $100 per month), for example. This will add hundreds of dollars monthly into your salon dream account.
Learning the difference between a “want” and a “need” makes setting priorities easier. A portable pedicure tub that costs $100 does the same job as a $5,000 jetted pedicure chair. If you charge $50 per pedi, it will only take two pedicure clients to break even on that $100 tub. Conversely, you must do 100 pedis making zero profit before you break even on that jetted pedicure chair ($5,000 divided by $50 = 100). Your profit begins with the third client versus the 101st client. If you stashed away the profits from those 100 pedicures done in a portable basin, you’d have enough saved to buy a new jetted pedi chair without borrowing money.
Start with buying only the basic supplies needed to get the job done and save the expensive upgrades for later when you can pay cash. Make a list of all manicure and pedicure supplies you’ll need for services, then purchase them one by one when on sale as money allows. Buy in bulk to save even more on supplies with no expiration date, such as table towels, orangewood sticks, cotton, gallons of acetone, packs of files and buffers, etc.
Look for used or scratch-and-dent equipment at your local distributor, plus search consignment stores, newspapers, Craigslist, as well as Facebook’s Marketplace.
Salons going out of business often sell their equipment for whatever they can get. With cash saved up you’ll be ready to make a deal, often for less than what they’re asking. Your local distributor can be a good source for leads because by interacting with many beauty pros every day, they hear through the grapevine who is moving, who is retiring, and which salons are closing.
Bartering is another good way to keep expenses down. David Currier, owner of La Roy’s salon in Knoxville, Tenn., reports trading a pedicure for a $700 manicure table. “It was like new,” he says. “I got it from a real sweet lady who was retiring.”
Your next consideration is location. It’s vital that you have enough parking in a safe neighborhood that’s convenient for the bulk of your clients, assuming you already have a clientele. If not, you better be an extreme extrovert who hustles daily by networking within the community to build a clientele before your next rent payment is due.
Learn your State Board of Cosmetology’s requirements regarding opening a nail salon before you proceed. Most require that it be in a commercial building. If your state allows a home salon, it must meet your city or county’s codes.
In some states, adding a required ventilation system will increase your costs. Nail tech Annette Luebke of Fill 413 Nail Studio in Waukesha, Wis., says that it cost her $1,500 for a heating and cooling company to retrofit ventilation onto the landlord’s existing system. Before installing ventilation equipment, be sure to get the landlord’s permission in writing.
Once you’ve familiarized yourself with the regulations you’ll need to comply with, you can begin to search for atypical rental opportunities.
One industrious tech I knew rented a janitor’s closet inside a commercial building when all other offices were full. This long, narrow room with no windows met state board approval with its mop sink, so she painted the walls a nice color, hung drapes over the exposed pipes, then decorated it to feel very homey. The best part was how she negotiated with the landlord for a monthly rent of only $50, which breaks down to an astounding $12.50 per week!
This immense savings allowed her to work from 9 a.m. to 3 p.m. and be home when her children got off the school bus. She had a full book of clients in her first year, so obviously the small size of her salon with its concrete block walls and no windows was not detrimental. When I opened my first salon after booth renting for eight years, I already had a full book of clients (lessening the risk of failure) and all salon supplies. The 10-ft. x 12-ft. room I rented in a commercial building for only $200 a month included water, electricity, and trash pickup (no Wi-Fi because it’s a “want,” not a “need”). Given that weekly booth rent in my town averages $100-$150, the move made total financial sense.
Nail tech Dana Clifton of Zephyrhills, Fla., opened her first salon, Dana’s Nail Room, five years ago in a commercial building for under $1,000. A stylist who left the salon where they were both booth renters called to say there was a small space open next to her new location. “It was so ugly inside and it took a lot of work. Two years later, when that stylist moved from next door, I moved into her bigger space renaming it Dana’s Nail Boutique,” Clifton says. “I won’t leave until I buy my own building.”
Remember that the financial decisions we make today will affect the choices available to us in our future. Before jumping into salon ownership, I urge you to do your research, calculate the costs, then build up a salon savings account for when great deals pop up. By covering your expenses with your cash flow, you’re saving on borrowing costs, minimizing your risks, and setting a solid foundation for a business that can grow steadily over the years.
The Frugal Salon Owner
These two salons were opened with an initial investment of less than $1,000:
Jill Wright Spa for Nails, Bowling Green, Ky.
Nail salon license: less than $50
Sink and faucet purchase and installation: $225
New business cards: less than $25 on Vistaprint.com
Gallon of wall paint: $0 (leftover from home)
Big easy chair for pedicures: less than $250 on sale
Room deposit and first month’s rent: $400 total
Dana Clifton, Dana’s Nail Room, Zephyrhills, Fla.
Salon, county, city and state licenses: $300
Water deposit: $80
Used pedi chair: $100
Plumbing: $150 (done by husband)
Small water heater: $0 (gifted by Clifton’s Avon Lady)
Rent: $365 (deposit waived due to space being vacant for two years)
Furniture: $0 (gathered from home)
Great Deals and Where to Find Them
Here are some great deals found by nail techs outfitting their salons on a budget.
Tracy Howe, Howe Unique Nails, Camdenton, Mo.: $200 for an Erica’s MT-20 E-file in mint condition from Craigslist.
Cherise Canter, Hairology, Harriman, Tenn.: We found a working pedi chair at a thrift store for $50 when we added nails to our salon.
Joy S. McCray, Nail Experience, Gwynn Oak, Md.: I found a nail table with leather chair for $60 on Craigslist and bought three. I couldn’t believe it — $180 for three tables and three chairs! They needed to be cleaned, but they were awesome.
Mariyon D Thomas-Brown, Dezigner Nailz, Louisville, Ky.: Two pedi chairs for $40 dollars at the Habitat Restore.
Lori Greene Adams, Shabby 2 Chic Salon, Germantown, Ohio: I got my pedi chairs for $100 each. The lady was moving and they had to be gone that night.
Candi Geter, Polished by Candi at Tavani Salon and Spa, Kalamazoo, Mich.: I found a big L-shaped nail table for $100 on Facebook Marketplace.
Tiffany Clark, Nails by Tiffany Clark at Attraction Styling Salon, Shelby, N.C.: I bought a $1,500 portable foot spa with chair new and unused for $175 from a friend of a friend who was closing her salon and made enough money with it to invest in a regular spa chair.
Kym DG, Dserved Ndulgences Salon and Spa, Waldorf, Md.: I found an entire salon of furniture for $250 on freecycle.com. Four manicure tables, cabinets, pedicure chairs — everything had to go and it went home with me.
Nail tech Jill Wright is the owner of Jill’s – A Place for Nails in Bowling Green, Ky., and the founder of the Nail Tech Event of the Smokies nails-only trade show (www.nailtechevent.com).