How to Open a Salon Suite Business

Owning a salon suite building can be an attractive idea for entrepreneurs because of the potential for steady income with a scalable business model and relatively low operating costs. There’s also growing demand for personal beauty services, making this a great time to open a salon suite facility.

There are crucial aspects of salon suite ownership to consider before diving in. This guide makes it easy to understand the risks, requirements and rewards of becoming a salon suite owner with insights on managing the costs, legal requirements, day-to-day operations and people involved in your new enterprise.

How Much It Costs to Open a Salon Suite Facility

Assuming an average salon suite size of 110 square feet and a building with 20 suites, the cost of buying the facility itself can cost around $539,000.

This estimate is based on a commercial real estate market report for the Atlanta metro area - of course building costs vary by location. You can find a report for your state and region here. Multiply the retail transaction sale price by your desired square footage for a ballpark building cost.

If you're leasing a salon suite facility it can cost around $4600 per month.

This lease cost estimate is based on the average price per square foot per year in Atlanta, GA. Search by your city and state here to see how lease costs in your area compare.

If you're opening a salon suite franchise, expect to invest anywhere from $500,000 to over $2M. Find financial requirements from popular franchises here:

• Sola Salon Studios
• Phenix Salon Suites
• Salons by JC
• My Salon Suite
• Image Studios 360

Salon equipment with timeless design in neutral shades like the Cinque Styling Chair and Avant Shampoo System appeals to a wide range of renters.

The cost of renovating for salon suites can range from $65,000 to $600,000. This estimate is based on an average 2200-square foot salon suite facility (20 suites x 110 square feet each) and an average commercial space renovation cost of $30 to $300 per square foot. It’s a wide range because there are many variables.

Significant cost factors for salon suite buildouts include:

• Size of space
• Structural changes
• Compliance with local codes/industry regulations
• Plumbing and/or electrical work
• Design & material choices

You’ll need quotes from local contractors to narrow the cost down more precisely.

Next, learn more about the options and obligations involved in opening a salon suite to better understand how much you'll need to invest.

Independent Ownership vs Franchise Salon Suites

Opening a franchise requires a bigger initial investment compared to going it alone, but being a franchisee comes with benefits that might be worth the extra cost.

Benefits of opening a salon suite franchise include:

• Familiar branding can help you attract tenants faster
• Standard procedures and proven systems can make startup smoother so you generate revenue sooner
• Business support from the franchisor can provide value in the form of location consulting, training, marketing, technical support, supply chain, compliance professionals & financial advisors

Becoming an independent salon suite owner can be a more attractive option if you want a smaller upfront financial investment and are willing to invest more of your time.

Benefits of opening your own salon suite facility include:

• Creative freedom - Defining and building your own brand takes time, but it’s worth the work if it’s your dream. You get to decide what type of business you create and who your target market is.
• Flexibility - You can choose your location, vendors, timeline & business goals and adapt them as needed without franchise approval restrictions.
• You keep all your profits - You’ll have to do more work to get your business up and running, but you won’t have to pay any franchise fees or royalties.

Furnishing your salon suite facilities with matching equipment like the Avant Styling Chair and Avant Shampoo System in classic black lets your tenants coordinate easily with their own decor.

No matter which salon suite business model you choose, there are many factors affecting opening costs:

• Buying or renting a property - cost varies by city, neighborhood, building size/condition and financing terms
• Remodeling - you’ll need to budget for contractors, possibly an architect, an interior designer and materials
• Equipment - your suites will need professional salon equipment including shampoo systems, styling chairs, stations, mirrors, lighting and more
• Technology & software - a security system with cameras, access control, Wi-Fi, suitable electrical circuits & outlets, a computer for your suite manager & property management software
• Legal & consulting fees - depending on your experience & expertise, you may need to hire a lawyer and/or consultants to review legal documents & make sure you’re in compliance with state and local regulations
• Marketing - initial marketing costs to launch can include online advertising, a business website, print media, various types of promotions & your grand opening event
• Franchise fee - a one-time fee you pay to the franchise company when you join

You’ll also need a certain amount of working capital on hand to cover operating expenses until your salon suite facility generates cash flow.

Salon Suite Business Operating Costs

Once your suites are open for business, you’ll have ongoing operating costs you should plan for:

• Utilities (salon suites use a lot of hot water)
• Cleaning services
• Building maintenance
• Employee(s) - typically a building/suites manager, but possibly more depending on on the size of your business
• Taxes
• Insurance - you’ll need adequate coverage for your property, business, general/professional liability & possibly more
• Bookkeeping

Franchisees also need to pay royalties to the parent company.

This rental property calculator can help you see the big picture, and includes helpful information for first-time building owners.

How Profitable Is a Salon Suite Business?

To get an idea of how profitable your salon suite business will be, simply subtract your projected operating expenses from your expected revenue.

A lot of different things determine the profitability of a salon suite business:

• Location (visibility & foot traffic)
• Number of suites
• Occupancy percentage
• Competition
• Business loan terms
• Operating costs
• Your experience level

Here are a few online resources to give you a ballpark idea of what you could make as a salon suite owner:

• $198,263/year - Franchise Chatter (median net profit from a My Salon Suite franchise performance group)
• $74,745/year - Comparably (average rental property owner salary)
• $45,600/year - BiggerPockets (based on case study for 9-unit salon suite with 100% occupancy)

As you can see, potential profits vary widely. You can consult with an experienced commercial retail attorney, commercial real estate agent or financial advisor to get local market insights and a better idea of your prospects.

If you’re going the franchise route, the franchisor will provide resources to help you understand how long it can take to recoup your initial investment and what kind of net profits you’re likely to make after. You can also work with an independent franchise broker to help you find the best value.

Legal Requirements for Opening a Salon Suite Business

To stay in legal compliance you have to know what type of salon suites you’ll be renting. Different beauty services have different licensing requirements, and they vary by state. Sometimes there are local laws to consider as well.

Consult with a business attorney to make sure all your legal requirements are met. In general, here’s what to expect:

• Business license - compared to your overall investment, this will be cheap: anywhere from $50 to $550 depending by state and business type
• EIN from the IRS - you’ll need this in order to hire employees to help you run your business
• Certificate of Occupancy - local government supplies this after passing inspection (see below)
• State Cosmetology or Barbering Board requirements - these boards set standards and conduct inspections for sanitation, licensing & operations
• Local Health Department compliance - local or county health departments often perform inspections focusing on sanitation and hygiene practices in salon settings
• Building Inspectors & Fire Departments - one or both may inspect salon suites to ensure compliance with building codes, fire safety regulations & occupancy standards

You should also be prepared to help your salon suite tenants understand required licenses, permits and recommended insurance coverage to quicken the path to occupancy/revenue generation.

Legal Paperwork for Salon Suite Franchise Owners

Becoming a franchise owner can simplify legal paperwork since the parent company will have a process in place for you to follow. There’s typically a pre-qualification phase where you find out if owning a franchise is a viable option for you, followed by a formal application.

If your application is accepted, the parent company is required by law to provide you with a franchise disclosure agreement, which is something you’ll want to review carefully. Don’t just rely on the franchise’s website or marketing materials!

Running Your Salon Suite Business

Being a salon suite owner means different things to different people. Some prefer to be hands-on and frequently visit (or co-manage) the facility. Others want to be more of an absentee owner, in which case you’ll need a trusted and experienced building manager (and possibly other employees).

Running a salon suite business can encompass things like:

• Making sure rent is collected and bills are paid
• Overseeing maintenance & emergency repairs
• Managing vendors responsible for cleaning signage, windows, bathrooms & other common areas
• Managing utility services (including WiFi)
• Keeping licenses & permits up to date
• Marketing activities & community relations
• Addressing questions and requests from tenants
• Possibly mediating disputes between tenants
• Addressing security issues that may arise

Responsibilities vary depending on whether you own or lease the property.

Relationships & People Skills

Becoming a salon suite owner means establishing and managing relationships with:

• Tenants
• Employees
• Industry & community members
• Contacts at parent company (if part of a franchise)

Having positive rapport with the people directly or indirectly involved with your business will make your job a lot easier—and likely more profitable as well!

As a leading manufacturer and supplier of professional salon equipment, Minerva Beauty understands what stylists are looking for in a salon suite, and how to start off on the right foot.

Tips for developing good relationships with your renters

Scope out your direct competitors and decide how you’ll set yourself apart. Consider that you’re asking stylists to leave their current location, which often means losing a certain percentage of their clients. Think about ways to make the switch both enticing and rewarding for them.

Know your target market

When you define your target market you can offer what they value most and attract top talent. You’ll need to understand their:

• Expectations & preferences
• Location & willingness to commute
• Career stage
• Style, mindset, behavior & interests

You should also study the demographics of your target market’s clientele, because your salon suites will need to appeal to both groups!

Create a place they want to be

Whether you’re renting salon suites to hair stylists, barbers, estheticians, nail technicians, lash and brow technicians or other beauty professionals, here are some universally-loved features:

• A clean, contemporary, well lit space. Natural lighting is a huge bonus! Hair stylists in particular put hair color specific lighting at the top of their wish list for a salon suite.
• Ease & convenience. This means plenty of parking, an accessible entrance and convenient nearby businesses like coffee shops, restaurants and retail stores.
• Well-planned space. Don’t be too stingy with your salon suite square footage—people want their clients to feel comfortable, not cramped. How you plan the space directly impacts your tenants’ earning potential, so take the time to get it right. If you don’t have experience creating efficient salon suite layouts, enlist the help of a professional to make the most out of every square inch.
• Ambiance. Make sure you have good insulation and soundproofing against traffic noise as well as sounds coming from other suites.
• Comfortable climate control. Individual temperature control for each suite would be a huge bonus. If that’s not possible, make sure it’s not too warm or too chilly so customers can relax and enjoy their session.
• Safety & security. Your building needs a locked entrance with access control unless you have a continually staffed entrance area. Popular security options for salon suite facilities include a keypad (clients are given a code) or a video doorbell system.
• Clean & well maintained. Onsite laundry facilities make your tenants’ lives easier. Make sure the shared restrooms are regularly sanitized and stocked. Keep common areas clean, and have a clear, responsive process in place for maintenance requests.
• Eco-friendly. Sustainability is trending in the salon industry, and creating a sustainable salon suite facility will put you ahead of the curve.
• Well-equipped. Professional grade salon equipment and furnishings are essential. Reliable, comfortable and ergonomic equipment makes a major impact on both your renters and their customers. Investing in high-quality equipment is also better for your bottom line because you won’t need to replace it as frequently. Modern shampoo systems, styling chairs and styling stations are the most important pieces to provide. Thoughtful touches like in-suite mini fridges sweeten the deal!

Provide clear lease terms

Create comprehensive lease agreements that are easy to understand. This will start things off on the right foot and establish trust so you can have a positive and mutually beneficial relationship with your tenants.

Work with a legal professional to make sure your lease contracts comply with all local laws and regulations, and make these provisions crystal clear:

• Duration, rental fees & security deposit
• Additional fees for maintenance & cleaning
• Guidelines for shared areas
• Utilities & amenities
• Independence & decision-making authority
• Termination, renewal & early release terms

It’s also a good idea to be open to negotiation on a case-by-case basis. For example, being willing to offer a discount for long-term rental or a month-to-month option for the right tenant can help keep your occupancy percentage high.

Help your renters succeed

If you have experience working in the beauty industry yourself, this will be a huge advantage as a salon suite business owner. Even if your background doesn’t include working in a salon, there’s still a lot you can do to help your suite renters run profitable businesses.

You can make your salon suites stand out from the competition by offering things like:

• Strong branding & marketing for your location (which in turn makes your tenants more visible)
• A website where each tenant can showcase their services & testimonials
• Business education opportunities like workshops, training sessions or access to consultants
• Community events where your tenants can connect with other stylists and meet other local business owners
• A client referral program (if you rent to a variety of beauty professionals)

Supporting your tenants with valuable resources and guidance will help their businesses thrive, decrease turnover and make running your own business easier.

Minerva Beauty's Lookbook and Style Guide are full of interior design inspiration for your salon suite business.

How to Start a Salon Suite Business

Now that you have an overview of the costs, legal requirements, operations and relationships you can use this checklist to get started:

• Create a business plan (you’ll need this to secure funding whether you’re opening on your own or with a franchise)
• Secure the right location - top considerations are visibility, parking, local demographics, competition and complementary businesses nearby
• Get all your legal documents in order - work with an experienced professional for efficiency and peace of mind
• Renovate & equip your salon suites - our guide to salon suite designs and supplies covers everything you’ll need and has helpful product pairings
• Generate interest & attract tenants - work with a marketing company to get the word out so you can sign tenants and open your doors for business!

Minerva Beauty makes it easy for salon suite business owners to define their aesthetic and find high-quality equipment for hair stylists & barbers, estheticians, nail technicians, massage therapists and other professionals.

Resources for salon suite owners:

• Style guide
• Salon lookbook from real-world salons
• Pinterest collection
• Instagram page
• Salon interior design articles from our blog
• 2D design tool for fine-tuning layout & furniture placement

Our representatives are here to support you every step of the way, from product selection to installation. We don’t work on commission, so you’ll get impeccable service whether you’re ready to buy today or still gathering information.