How to Start a Hair Salon

If your dream is to open a hair salon, this is a good time to do it. The U.S. hair salon industry generated an estimated $60.0 billion in revenue in 2025, growing at a 5.5% compound annual rate over the past five years even as the industry saw a slight, 1.0% pullback this year. There are also roughly 1 million hair salons operating in the U.S., and no single company controls more than 5% of that market — meaning there's real room for a well-run independent shop, but also real competition for every chair.

This guide will walk you through what it actually costs to open a salon, what licenses you'll need, and how to think through the decisions that matter most before you sign a lease. We also talked to two salon owners with very different businesses: Dallas Alleman, who owns Salon Du Beau Monde in New Orleans and has spent decades as a licensed cosmetologist and instructor, and Avi Shenkar, an entrepreneur without a salon background who's opened two BLO/OUT locations in Philadelphia and has more in the works. Their businesses look nothing alike, but their advice lines up more than you'd expect.

Is Opening a Hair Salon Right for You?

How different can two successful salons actually look?

Very different — and that's the point. Alleman runs a high-end boutique salon offering the full range of traditional services, built on decades of relationships with clients and staff. Shenkar's BLO/OUT locations are a leaner, faster blowout-focused concept aimed at scale. Neither model is “the” right way to run a salon; the highly fragmented nature of the industry means there's space for both, along with the budget quick-cut shop, the full-service hair-and-beauty salon, and the upscale barbershop. What matters is picking one and building your plan around it, not trying to serve all of them from the same chair.

What does the schedule and workload actually demand?

Expect long hours up front, especially if you're also styling clients while running the business. Alleman and Shenkar both describe the early years as consuming — reviewing the plan monthly, staying on top of marketing, and being present enough to shape the culture new hires will carry forward.

Do you need a cosmetology background to own a salon?

No. Shenkar had no salon industry experience before opening BLO/OUT — his background was in business, not behind the chair. Alleman, by contrast, is a licensed cosmetologist and instructor with decades in the industry. What you don't have in technical background, you need to make up for with a general manager or lead stylist who does, and with an honest financial plan that doesn't assume you'll skip the learning curve.

How Much Does It Cost to Start a Hair Salon?

Most new hair salons cost somewhere between $30,000 and over $100,000 to open, according to NorthOne's 2025 salon startup cost breakdown — with the final number driven mostly by your lease, your build-out, and how much you spend outfitting the space before your first client sits down.

Here's roughly where that money goes, per the same analysis:

• Lease and location: $1,000 to over $4,000 a month, depending on whether you're in a suburban strip or a high-traffic urban block
• Renovation and build-out: $5,000 to $25,000, covering electrical, plumbing, and safety upgrades
• Licensing and permits: typically under $100 to $1,000, though this varies significantly by state (more on that below)
• Equipment: chairs and shampoo stations alone can run up to $27,000
• Initial inventory: $2,000 to $20,000 for retail and back-bar product
• Branding and marketing: $1,000 to $2,700 for a logo, website, and interior design, plus your grand-opening push

That range doesn't include your operating cushion — the cash you need on hand to cover rent, payroll, and utilities while you build a client base. Budget for that separately, and budget for it to take longer than you'd like.

What Startup Costs Catch People Off Guard?

Is insurance more expensive than people expect?

Not dramatically, but it adds up faster than first-time owners assume. Hair salons pay an average of $57 a month, or $684 a year, across six common coverage types, according to a 2026 MoneyGeek analysis — but a single policy can run anywhere from $16 to $98 a month depending on the coverage and your state. General liability alone ranges from about $42 a month in West Virginia to $112 a month in California.

What's the newest line item most salon owners don't budget for?

Cyber insurance. If your salon takes online bookings, stores client payment information, or runs a loyalty program — most do now — you're carrying real data exposure. MoneyGeek's 2026 data puts cyber coverage at $83 to $121 a month depending on the state, squarely in the “nobody mentioned this to me” category for a lot of new owners.

Does staffing model change your cost structure?

Significantly. If you're renting chairs to independent stylists instead of employing them, average booth rent runs $400 to $600 a month in 2025, climbing past $1,000 in premium markets like NYC or LA and dropping to around $200 in less populated areas. A useful rule of thumb from that same analysis: booth rent shouldn't exceed 30-35% of a renter's projected income, or it starts squeezing out their ability to buy product and market themselves — which affects how much they can realistically pay you.

If you're building a commission model instead, look at what other salons in the industry actually pay. In LivePlan's own Hair and Beauty Salon Business Plan sample, stylists earn 60% commission with no guaranteed base; in the Barber Shop Business Plan sample, the commission rate is 45%. Neither number is “correct” — it depends on what you're offering stylists in return (guaranteed hours, product discounts, a built-in client base) and what your local market supports.

What do salon owners say catches people off guard?

“I find that choosing one brand to work with is less confusing for the client and the staff,” Alleman says of product lines — and he cautions new owners against treating retail as a real revenue driver early on. You'll spend real money on initial inventory, and much of what you sell just gets reinvested in restocking, not pocketed as profit.

What Licenses and Permits Do You Need to Open a Hair Salon?

Licensing requirements vary by state, so don't assume your state works like your neighbor's. Two real examples show how differently this plays out:

In Massachusetts, opening a cosmetology salon means submitting a $136 application, a scaled floor plan showing every station and sink, a notarized background-check form for each owner, and a price list for every service — gender-based pricing is explicitly prohibited. Your salon has to be fully built out and ready for business before an inspector will even schedule your final approval, and the license doesn't transfer if you move locations.

In Washington State, the salon-specific requirement is simpler on paper but has real teeth: you must certify at least $100,000 in public liability insurance covering combined bodily injury and property damage before the state will issue your salon license.

Beyond the salon-specific license, expect to need:

• A cosmetology license for anyone performing services (this is separate from a business license, and typically requires 1,000+ training hours depending on the state)
• A standard business license, available through the U.S. Small Business Administration
• Health and safety permits, which your local health department or cosmetology board can specify
• Liability insurance meeting your state's minimum, plus whatever additional coverage (workers' comp, cyber, commercial property) fits your specific risk

Check with your state's cosmetology or barbering board directly before you finalize your budget — a fee or requirement that's accurate for one state can be completely wrong for the one next door.

How Do You Actually Start a Hair Salon?

1. Decide what kind of salon you're building

Before you do anything else, decide whether you're building a budget-friendly quick-cut shop, a full-service salon, or something upscale and specialized. This decision drives everything downstream — your pricing, your location, your staffing model. If you're not sure which lane fits, How to Write a Hair Salon or Barber Shop Business Plan walks through the differences and links to three real sample plans — a budget hair salon, a full-service hair and beauty salon, and an upscale barbershop — that show how differently each model is built.

2. Write a business plan

“No business can function properly without a business plan,” and you don't need to make it complicated. Our guide on how to write a business plan is a good starting point, or if you want something faster, try Lean Planning instead. LivePlan's business plan builder walks you through each section and helps you spot the gaps in your thinking before a lender or landlord does.

3. Get licensed

Confirm your state's cosmetology license and salon license requirements before you sign a lease — not after. As the Massachusetts and Washington examples above show, the paperwork, fees, and insurance minimums can differ enough to change your timeline by months.

4. Figure out your funding

Whether you're seeking a bank loan, borrowing from friends and family, or bootstrapping, get clear on how much you actually need and where it's coming from before you start spending. With most salons landing in the $30,000-$100,000+ range, a realistic financial forecast — not a guess — is what a lender or investor will actually want to see. LivePlan's forecasting tools build that projection from your real numbers, not a template.

5. Find a mentor

Find someone already in the salon industry who can answer questions as you plan and grow. Neither Alleman nor Shenkar built their businesses in a vacuum, and both point to relationships in the industry as part of what got them through the hard early decisions.

6. Choose your location carefully

“Location is the difference between success and failure,” Shenkar says — he admits that if he could pick again for his first salon, he'd choose differently. Choosing the right location means looking past the storefront itself: know your target demographic, your local competitors, parking, and any construction planned nearby. Alleman also suggests driving the neighborhoods you want to be in and calling owners of vacant-looking properties directly — plenty of spaces aren't listed but are available if you ask.

7. Decide your staffing model and set your pricing

Commission, booth rental, or employee — each one changes your cost structure, your insurance, and your control over the client experience (see the cost breakdown above). Whichever you choose, price your services against what your local market actually supports, and build a financial forecast around it rather than a guess. This is also the step where the sample business plans mentioned above are most useful — they show real commission structures and pricing from salons that have already made this decision.

8. Build your brand, hire for personality, and market before you open

Build your brand around the clients you actually want, not the ones you assume you should want. “Provide an experience for your customers, not just a service,” Shenkar says — “the overall experience is what keeps customers coming back.” Alleman hires the same way: “I don't hire for talent — I can teach a new hire the skills I want, but I can't train someone to love and nurture my clients.” Set aside real budget for marketing before you open, not after, and don't assume a loyal client base means you can stop finding new ones. “New client acquisition should be a full-time job,” Shenkar says. “Contentment will kill a salon.”

Ready to put real numbers behind these decisions? Start your business plan and build the financial forecast that turns this into a fundable, workable plan.

FAQ

Sources and Helpful Resources

• IBISWorld: Hair Salons in the US Industry Analysis, 2025 — market size, growth rate, and industry structure
• NorthOne: How Much Does It Cost to Open a Salon in 2025? — startup cost breakdown
• NorthOne: Average Booth Rent for Salons in 2025 — booth rental economics
• MoneyGeek: Average Hair Salon Business Insurance Cost (2026 Report) — insurance costs by coverage type and state
• Massachusetts Division of Occupational Licensure: Apply for a cosmetology salon license — real-world state licensing example
• Washington State Department of Licensing: Salon Shop, Personal Service, or Mobile Unit license — real-world state licensing example
• U.S. Small Business Administration: Apply for licenses and permits — general business licensing starting point
• Salon Du Beau Monde and BLO/OUT — the two real salons whose owners were interviewed for this guide