How To Open a Nail Salon

A business plan is a tool to outline your nail salon's goals and how you will achieve them. It will help you determine what you need to launch and grow a successful business.

You'll also use your business plan to secure business loans or startup capital. Banks and investors will want to see your business's roadmap, particularly your market analysis and financial information.

Your business plan should cover:

• Employee list
• Management list
• Your target market
• Your salon's location
• What services you will offer (like nail art, acrylic nails, and gel manicures and pedicures)
• Your salon's niche and how you will stand out from your competitors
• Anticipated startup costs, including supplies and equipment
• Your pricing strategy, based on the market area
• Ongoing expenses and expected profits

Some of the details in your plan will depend on the specifics of your business model.

The U.S. Small Business Administration (SBA) offers free business plan templates. These templates are a great tool to help you start drafting your plan.

Choosing a name for your nail salon is an opportunity to flex your creativity. But there are specific rules for naming your business. Namely, it can't currently be used by another business or protected under a trademark.

Most states' Secretary of State Division of Corporation websites have a search tool you can use to check if your selected name is already registered to another business.

To check for federal trademarks, use the trademark search database tool on the U.S. Patent and Trademark Office (USPTO) website.

Choose a unique business name that resonates with your audience. It should be memorable yet easy to pronounce. Imagine how it sounds and how it will look on your signage and branding. Don't choose a name that may limit your ability to grow and evolve. For example, using the street number in your business name may not work well if you move your salon or open new locations.

Think carefully before settling on a name—it will become your salon's brand. Changing it later will cost time and money. It can also damage existing brand recognition.

There are different legal structures to consider for your small business:

• Sole proprietorship
• Partnership
• Limited liability company (LLC)
• Corporation

These structures offer distinct advantages and disadvantages regarding taxation and liability. Make sure you understand the key points of each option before choosing your business structure.

Sole Proprietorship

A one-person business is a sole proprietorship. It's the most common business form and the most straightforward to create. It's also considered the default legal structure for businesses. This means that if you don't choose another structure, the state will automatically treat your nail salon as a sole proprietorship.

Since the law views you and your business as a single entity, you report profits or losses on your personal tax return. While a sole proprietorship requires the least paperwork, it exposes you as a business owner to personal liability. If someone sues your business or incurs debt, your personal assets are at risk.

Partnership

If you have a partner in your nail salon, consider a partnership. Partner members are responsible for business lawsuits and debts.

You can get corporate protection for your partners by forming a corporation or limited liability partnership (LLP).

Limited Liability Company (LLC)

A limited liability corporation (LLC) has the tax advantages of a sole proprietorship and the liability protection of a corporation.

As a result, an LLC is a popular choice among one-person businesses.

Corporation

A corporation separates business profits and losses from the business owner. A corporation also shields the business owner from personal liability for the business operation.

But you may pay taxes on the corporation's profits and the income you receive on your personal tax return, or "double taxation." You can avoid double taxation by applying to the IRS for an S corporation.

Once you choose your business structure, register it with the Secretary of State Division of Corporations in the state where your business operates. Or you can let our trusted partner LegalZoom handle your business formation filing for $99 plus filing fees.

After you register your business structure, apply for a federal Employment Identification Number (EIN) through the Internal Revenue Service (IRS). It's like a Social Security number for your business, which the IRS uses for tax and identification purposes.

This number is a taxpayer number for your business. You use it to:

• File tax returns
• Open a business bank account
• Obtain business licenses
• Hire employees

You can get an EIN instantly and for free by applying on the IRS website. Watch out for commercial sites charging a fee for an EIN—many of them look similar to the official IRS website.

The average cost of a nail salon startup ranges from $10,000 to $500,000. Where your business falls in this range depends on your location and the scope of your business.

You most likely will need a business loan or other outside financing for your nail salon. Be prepared to defend your business plan when you meet with lenders or potential investors.

In your loan application, include all the equipment you need for your salon. Also, calculate your ongoing costs and taxes, including:

• Payroll and staffing
• Supplies and inventory
• Rent and utilities
• Equipment repairs and maintenance
• Business insurance
• Marketing and advertising

Remember that if you use a business plan to support your funding, your proposal must be in good faith. You are committing fraud if you fake numbers that lenders rely on

Choosing a storefront for your salon is another critical decision you'll make for your business. Ideally, find a central location with steady traffic that's convenient for your target market.

Renting space from an existing hair salon (or booth rental) may also be possible. This option limits some of your freedom as a business owner, as you must abide by the rules of the salon owner. They may also limit the hours you can provide services to clients. Still, booth rental can be a great way to build your clientele with significantly less startup capital.

In leasing space for your nail salon, be aware of local rules and zoning. Once you find the space to lease, you may negotiate with the property owner to build it out to your requirements.

It's a good idea to have a business lawyer review your leases. They can identify any potential issues in the lease's terms and negotiate with your landlord on your behalf.

Be sure to get all the supplies and equipment you need for your operation. For example, you'll need:

• Manicure and pedicure stations and chairs
• Sanitizing and ventilation equipment
• Nail polish and nail care inventory (including cuticle oils, lotions, and clippers)
• Nail polish and product displays
• Curing lamps and dryers
• Decor and furniture
• Point-of-sale (POS) technology

Look for deals to keep costs down. Consider what's essential for your business. For example, a pedicure spa chair costs anywhere from $1,000 to over $7,000.

Purchase used equipment when possible. Specifically, reach out to salon owners closing their business—they may be more likely to offload their equipment at a fair price. Or consider leasing equipment from a salon finance company.

You may also need to invest in appointment scheduling software. Some systems integrate scheduling with payments or marketing capabilities.

A nail salon must have the necessary business licenses and permits to operate. Most nail salons need the licenses listed below.

General Business License

Your state, county, or local municipality issues a general business license. This is necessary to operate your business. Check with your local chamber of commerce to understand what your nail salon needs.

Seller's Permit

Some states require a seller's permit if you sell products (for example, nail polish) and provide nail services.

Certificate of Use and Occupancy

A certificate of use and occupancy (CO) allows your nail salon to operate at the business location. Your local zoning or building department usually issues these.

Because your business uses chemicals, your inspector may have additional requirements for the storage and safety of hazardous materials.

Cosmetology License

Your state's board of cosmetology licenses and regulates nail technicians. You need a cosmetology or nail technician license to perform nail services for the public.

Some states also require formal nail school education and passing an exam. Check the licensing requirements in your state.

Any business open to the public has some form of liability. But a nail salon has particular risks, such as bacterial infections and allergic reactions.

Protect your business with insurance and learn how to reduce the risks in your operation.

Insurance

Salon owners should look into business insurance policies. Some of these are:

• Professional liability
• General liability
• Property liability
• Worker's compensation

These policies are explained in detail below.

Professional Liability

Professional liability insurance is also called error and omissions insurance. This insurance covers medical and legal expenses and any damages resulting from your services. For example, if a client develops a severe nail infection, they may have a personal injury claim.

General Liability

Here are typical examples of when these insurances apply:

• Property damage to a client's property: A technician accidentally spills nail polish remover on a client's designer purse
• Personal injury claims: A client slips and falls while getting out of a pedicure chair
• Product liability: A nail polish you sell causes a client an allergic reaction

General liability insurance protects against property damage claims, personal injury, and product liability.

Property Insurance

Property insurance covers damages to the building or leased property and the contents of the building. It also covers loss of income for business disruption. For example, a fire in the salon will close your business for some time. Property insurance covers repairs to your salon. Business interruption insurance provides lost income while your salon is shut down for repairs.

Worker's Compensation

If you employ nail technicians, you must have worker's compensation insurance. This covers medical costs and lost wages for employees injured on the job.

Nail salons carry some risk of injury to clients and staff. Carefully review your business activities and take steps to reduce the risk of injuries.

Chemicals

There are many toxic chemicals used in nail salons. Work in a well-ventilated place to avoid overexposure. Follow the Occupational Safety and Health Administration's (OSHA) regulations concerning health hazards in nail salons.

Sanitation

Sanitary care is critical in nail salons. Failure to keep equipment clean causes infections and possible personal injury lawsuits. Be sure to train your nail technicians in sanitizing tools and equipment.

As a salon owner, you can hire employees who work for you or rent out booths to independent contractors. It's helpful to know the difference between the two.

Most nail technicians are independent contractors. Most salon owners prefer independent contractors over employees. This is because they don't have to file payroll taxes and withholding.

The Department of Labor Wage and Division outlines when a nail technician is an independent contractor versus an employee. Consider whether your nail technician:

• Rents their stations
• Purchases all tools and supplies for their use
• Has their own customers and sets up their own appointments
• Sets rates for services and paid directly by customers
• Has their own business licenses

Nail Technician Requirements

Any nail tech performing services in your salon must have a current nail technician license. It's your responsibility to verify that licenses are current and in good standing.

There are many ways to market and promote your nail salon business. Most effective marketing plans combine digital and traditional promotional channels. Consumers enjoy the ability to book appointments online, so a user-friendly, accessible website should be a top priority. This also lends to the credibility of your salon.

Maintain a strong presence on your social media platforms. Post consistent, interesting content that engages your target audience. Don't overdo sales and promotional posts—be sure to post informative and entertaining content, too. The goal of your salon's social media should be to connect with your audience and build relationships.

Customers also appreciate rewards and referral programs, and this can be a great way for you to reward loyalty and attract new clients. Consider offering regular customers discounts or other perks for their continued patronage and referring new business to you. Word-of-mouth is still a tried-and-true marketing method, and it can be an effective way to expand your customer base.

Traditional methods like direct mail, print advertisements, and business directory listings can also help you reach potential customers.

Before you start your marketing campaign, review the advertising and marketing laws that affect your efforts. For example, do not use another salon's logo, slogan, or advertisement. There are also specific rules for email marketing.

Now, it's time to celebrate your nail salon and start providing services. Consider hosting a grand opening party to introduce your business to the community. As you grow your salon (and when you face challenges), remember to refer back to your business plan. It's the backbone of your business.

You may also need help and support as you operate your salon. Get in touch with a business attorney, marketing expert, accountant, industry mentor, or others as needed. Even the most experienced entrepreneurs seek expert advice at times.