Listen to your gut here. I have heard of this happening dozens of times. Old owner lists “the business” for sale but refuses to sign contracts specifying what’s included in the sale and won’t sign a non-compete. Bright red flags everywhere. You should never purchase a business without several guarantees in a legally-binding contract. That contract needs to clearly spell out what you’re getting for your money–the client records, the employees, the business itself (as in the actual brand), etc. It also needs to restrict the old owner from competing with you for a period of time (3-5 years is typical, with a proximity radius of 3-5 miles around the salon). Another is a non-solicitation, which keeps the owner from soliciting clients of the business (so they can’t open a shop 5.5 miles away immediately after you purchase and call all the clients in the database).

Spend at least five years working all positions in a salon (or several). You need to know how each position works, what tasks they’re expected to handle, and see first-hand what works and what doesn’t work. Spend time watching others make mistakes and learn from them. I have a LOT of consulting clients who open salons with zero experience. It’s a terrible idea and almost certain to end in failure. Some of my clients hold MBA’s and have extensive corporate management experience (we’re talking high-level managers of entire divisions of major companies), and they still call me a few months in and say, “What the fuck was I thinking?” Lol, so my most critical piece of advice is to take it slow, spend some time observing and learning first-hand, build your skills and get to know the industry and the people in your local area who work in it. There’s a lot more to running a salon than most people initially think.

Hi Jessica! You might find this article helpful. I don’t know of any books about team-based pay, but it’s an extremely common structure in the industry and there are a bunch of different ways to implement it.

The reason you’re not finding those numbers is because they don’t (or at least shouldn’t) exist. In my work as a consultant, I get asked this question by every client in one form or another. “How much money can I expect to make?” It cannot be answered. The reason for this is that there are far too many variables at play in the service industry–and even more in the personal services industry–and even MORE in the luxury personal services industry. National numbers certainly won’t be reflective of anything since each area’s demographic vary widely. Even local numbers can’t be trusted since each business is managed differently and the retention abilities of each staff member will affect that salon’s productivity.

Here are a few of these factors:
1.) Location traffic. How many people are walking by the location?
2.) Local economy. How many people in the area can afford to visit the location? (This branches into multiple other factors, such as pricing, perceived value, perceived quality, perceived risk, etc)
3.) Marketing & web presence. How heavily does the salon advertise? How visible and accessible is the salon’s “brand?”
4.) Retention. How good is your salon and the staff within it at keeping the business they obtain?
…seriously, I could make this a list with 20 bullet points, but I’m sure you understand by now just how pointless it would be to even attempt to factor those things.

I have worked as a salon & spa manager for the duration of my career. Within the same salon, it is extremely common to see one stylist making six figures and another making barely $25,000 a year.

Do not waste any of your time or effort attempting to predict productivity or traffic or income or sales or–anything. You can’t see the future. Instead, where your plan is concerned, focus on KNOWN numbers. Ignore variables as much as possible. If you’re applying for loans or grants, this refusal to project unknowns will show the lender that you know the industry. Whenever anyone approaches me with their “projections,” I laugh. 99% of the turnaround clients I work with tell me the same thing. “I don’t understand! My financial projections said I’d be making $X but I’m definitely nowhere near that!” It’s because projections are a joke. Redirect your energy into planning based on what you know to be true. The less assumptions made, the better.

When I work with new startups, we start with known numbers and work backward from there. Some salon owners will start with a location and product lines (superficial stuff) and build their business structure around that. Doing that sets a salon up for failure. Instead, start with known expenses like payroll, product & equipment investment, marketing budget, contingency savings, insurance, licensing, support services (accounting), web design, desired demographic (use your target clientele and expenses to determine base pricing), etc–and THEN look for a location and set a build budget based on what you KNOW you can afford.

No amount of guesswork will lead to an accurate outcome because salon performance comes down to proper staffing, effective marketing, and dedicated management. Seriously. Don’t project. You’ll set yourself up for failure. A lot of new salon owners make the mistake of overspending, relying on their ridiculously optimistic “projections” to quickly replenish their debt. It happens so often, it should really be stamped on the establishment license applications as a warning.

Hi Tina,

I am preparing a business plan for a salon, and despite my best efforts, have been completely unable to locate any industry data on average initial productivity rates across the industry. I realize that productivity is not a measure of success, and that this percentage relies on many factors, but I am struggling to find a way to project how many people will be coming in (and thus how much money will be coming in.)

I’ve read that the industry target is 80%, but that’s all I’ve found. I expect to be open 12 hours per day with two 6-hour shifts per day of two stylists each (so, a total of 4 stylists working per day.)

I would be incredibly grateful for the name of any source that could provide this kind of insight. I’ve tried to back into numbers using national data on total revenue, average revenue generated per stylist, etc. but really need something more concrete to firm up my financial projections.

Thank you!

Beth, I’m emailing you right now.