How to start a day spa business or beauty salon
Thinking about setting up a spa business? Check out our guide on how to open a beauty salon
- Beauty salon ideas
- Beauty salon business plan: cost to cost to start a beauty salon or spa
- Beauty salon regulations and rules
- Tips and useful contacts on how to open a beauty salon
- Register a beauty business name with our preferred company formation agent (external site, opens in new tab)
- See if you can get a Start Up Loan to help you start a beauty business idea (external site, opens in new tab)
The beauty salon business plan
How much does it cost to start a beauty salon and spa?
As already indicated, to open a beauty salon or start a beauty business you need to be prepared to sink a substantial sum into your venture from the get-go.
You will need immaculate premises, high-quality treatments, and well-trained specialist staff. None of this comes cheap.
“You need to put a lot of investment into this kind of business,” Gurung of the Himalayan Day Spa insists. “It depends on how big your spa or beauty salon is and how you would like to be seen, but really, the clients’ experience is the main priority. All of the staff are expensive.”
Whatever type of beauty salon or spa you’re setting up, the general rule of thumb appears to be that you expect your beauty salon or spa to cost a lot more to set up than you budget for.
Gurung’s initial investment to start a spa was around £150,000 – a figure she was not anticipating. “I wasn’t prepared for the cost,” she admits, “but I was focused and I followed my dream. To start a business, you should always expect it to be times two or times three of your estimate. Mine is four or five times.”
Cost to open a beauty salon: Finding premises
Lorraine Fletcher of Atelier Salon & Spa – who had to renovate her Grade II listed premises before opening her beauty business – agrees: “As with anything, you don’t really know how much money goes into the building work. We started off with a budget of £110,000 and it ended up being £200,000.”
See if you can get a Start Up Loan to help you start your business
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But, even if you don’t have to strip out and revamp your business premises, the equipment and fit-out needed to open a beauty salon still adds up: “I would say it would cost you between £60,000 to 80,000 to start a beauty salon or spa” Lorraine estimates. “That includes all your equipment and fit out.” So even if you want to start a home based spa business you’ll need to consider the costs of your beauty equipment.
The fit out of your beauty salon or spa really depends on the kind of treatments you’re going to be offering. If it’s just basic treatments, then it’s going to be cheaper to set up: the equipment needed for manicures and pedicures is just a few hundred pounds, whereas laser machines could cost thousands.
Cost to open a beauty salon: Products and suppliers
The cost of your products and the supplier(s) you use will also depend on what kind of beauty salon you’re going to be, and the constraints of your budget. But you should do everything in your power to search for the best price.
Gurung had trouble in this regard, because she was new to both the beauty industry and the British business scene. Her network was very limited, so she struggled to find value; she says she had to spend three times her budget on fit-out and equipment because she didn’t have the right contacts.
Kim Ford, of BABTAC, says that trade magazines and tradeshows are really good places to source new suppliers for products and equipment, and advises new start-ups in the beauty business to seek membership of an organisation so they can keep abreast of new products and new trends in the industry. You can view our useful contacts for how to open a beauty salon here.
Ford also believes trade shows are the best places to negotiate on price: “You have the opportunity to meet the sales rep, and it’s very competitive. These are huge exhibition halls, with lots of people offering the same product and the same equipment. “Rather than go with one company and try to beat them down on price, make them compete amongst themselves.”
However, when picking your suppliers and furnishing your beauty salon or premises, keeping costs down should not be your only concern. Second-hand equipment bought from eBay and liquidation sales, and reduced price lots from suppliers, may look cheap at first – but sometimes it’s better to invest in the best. Buying second hand can be a false economy.
Don’t forget that you will also have to pay for licenses for some treatments (see more on the next page), and you’ll also need to consider insurance (read more in our guide to beauty therapist insurance).
What can you earn by opening a beauty salon or spa?
Unless you are phenomenally successful, you should not expect to make any profit from your beauty salon or spa for the first year – or even for the first two or three years.
In the beauty business, overheads are quite high, and you can’t afford to scrimp if you want to make a good impression and build up a loyal client base.
Lorraine Fletcher says she wouldn’t imagine any business could make any profit for the first two or three years, “unless you’re an internet company and your overheads are very low. I would hope to start reaping the benefits in maybe four years. Before that, I think you have to put everything you earn back into the business.”
Once you are well-established though, your beauty salon or spa is likely to make a very healthy profit.
“The profit margin or running a beauty spa is around 65%,” Gurung of Himalayan Day Spa estimates. “I can earn profit straight away and I have a certain number of clients coming every month. I’m look to sell £300 in beauty treatments a day.”
Lorraine Fletcher, founder of Atelier Salon & Spa, averages 700-800 clients a month, with perhaps 150 new clients within the same time frame. She says the trick to running a beauty business is retaining customers.
A small beauty salon tends to retain a higher percentage of clients than a large one, so if you keep a focus on personal customer care, you’ll be doing well. The average number of clients visiting a small beauty salon per week is 125.
Ideally, your beauty salon/spa will be fully-booked from morning until night, seven days a week, but this is unlikely to happen straight from the off.
Generally, beauty salons and spas are quiet at the beginning of the week and booked solid coming up to the weekend when consumers are likely to have more free time so you should consider this when thinking about when your salon or spa will be open.
Beauty salon pricing and managing staff
Historically, massage has been the most popular treatment provided by beauty salons and spas, but the landscape is changing all the time.
Preferences vary hugely from client to client. Kim Ford, of BABTAC, says that while a no-frills ‘maintenance client’ just comes in for nothing more than a leg-wax and an eyebrow shape, there are many cross-selling opportunities.
“The nail industry is huge, for instance,” Ford points out. “You have to decide whether you’re going to offer more varied treatments, as they require some expertise.”
It’s also worth considering new treatments as soon as they come out, because they can give your beauty salon or spa the edge.
“The national press and the women’s editorial magazines tend to drive the interest in new products,” Ford explains. “Therapists should get involved in new therapies very quickly so they don’t miss out, but they should make sure they’re approved by an association, such as BABTEC.”
When you’re creating a business plan for your beauty salon, you should decide whether you’re going to branch into retail as well, and consider investing in retail stock for your salon or spa reception.
Setting prices for your beauty salon
Kalpana Gurung supplied us with some sample prices from her business, the Himalayan Day Spa in Chiswick:
|Hot oil hand and nail treatment||£40|
|Pedicure and reflexology||£65|
|Half leg wax||£20|
|Full face and body spray tan||£30|
|Deep cleanse facial||£65|
|Body mud wrap||£65|
|Hot stone therapy||£75|
These prices may serve as a useful guide for your own beauty business – but bear in mind that the Himalayan Day Spa is in London, and if you’re thinking of running a regional beauty salon or spa then you may not be able to charge customers as much.
Hiring staff for your beauty salon
Your beauty salon or spa is only as good as your staff, so it’s important you find competent beauty therapists to man your business.
At the very least, all of your therapists will need a qualification from a recognised government body. Just to secure insurance for your organisation, your staff will need either a level 2 or 3 NVQ or exam equivalent. Standards are developed and set by Habia.
Whether you decide to take on experienced staff is up to you: there are pros and cons. If you are a very experienced therapist, it might be a good idea to bring in therapists with fewer qualifications and pass on your own knowledge. However, if you are less experienced or qualified in beauty therapy yourself, you may want to take on someone with skills to offer.
Kim Ford, of industry body BABTAC, has had success in taking on very well qualified staff, but also advocates taking on therapists straight out of training school.
“The pro with someone unqualified is that you can then train them in treatments, how you’d like them done,” Ford explains. “You’d almost have a sort of corporate team of therapists to train in-house towards a recognised qualification in post-graduate training. But the benefits of bringing someone qualified in is they have skills that you may not have.”
Available beauty qualifications are dizzying. They include: NVQs; City &Guilds; SVQs; Vocational Training and Charitable Trust (VTCT) certificates; BTEC HNDs; Confederation of International Beauty Therapy and Cosmetology (CIBTAC); Comite International d’Estethique et de Cosmetologie (CIDESCO); ITEC and Edexcel qualifications.
It’s important to note that training offered by a product company will not result in a recognised qualification.
Kalpana Gurung of the Himalayan Day Spa says the minimum she requires is NVQ2 and 3, but her staff generally have additional certificates for things like holistic massages.
She believes it’s always better to check your staff’s qualifications with the education department. “Some have BTEC, some have ITEC qualifications,” she explains, “or even overseas qualifications. You really need to verify your staff are qualified.”
Therapists usually work a five-day week of 37-40 hours, but some salons operate on six and seven days. Salaries for beauty therapists start at around £10-15,000 a year, while experienced therapists can earn between £15-20,000. Salon managers can earn over £20,000 a year. (Apply ‘London weighting’ for Central London salons and spas.)
Commission is typically 10% of a therapist’s takings.