Beauty salon

How to start a spa business Visiting a beauty salon or spa may involve plenty of relaxing pampering, but running such a business isn’t quite as easy.

As more consumers choose to treat themselves, the personal services sector is tipped to thrive, so start-ups in this area need to ensure they find an edge within the market.

What is it and who is it suited to?

There’s more to beauty salons than manicures and massages. Some people view them as a kind of modern-day sanctuary, where they can retreat from the stress of their everyday lives.

In addition to providing impeccable products and outstanding service, your venue must be looked upon as an ideal environment to relax in.

Business owners in the industry typically come from a background in beauty, massage or relaxation, and therefore have the necessary qualifications in addition to experience.

However, if your background is not in beauty or relaxation, you should consider employing a qualified beauty therapist as a day-to-day manager to compensate for any shortfalls in specialist knowledge.

The owner of a start-up salon must have good people skills and stamina and be prepared to put in long hours.

Rules and regulations

Start-ups are advised to join an industry organisation, which will represent their interests and ensure they comply with the law.

Members of Hair and Beauty Australia include beauty salons, day spas, beauty product manufacturers and suppliers, and training colleges.

The HBA states: “Hair and Beauty Australia membership offers you excellent professional services and commercial benefits, which you can take advantage of to more effectively run your business.”

This includes advice on Fair Work Laws, OHS, workers compensation, apprentices, and legal and commercial matters.

The HBA also provides its members with updated award rates, drafting of employment contracts, business policies and other employment-related matters.

Research and competition

Industry experts say start-ups should research the market and demographic in which their salon or spa is based.

There has been a spate of spas opening in various markets recently, so the industry is more competitive than it used to be.

Top tips include:

Know your competitors before you set up and ensure there is enough demand to warrant two or more salons in close proximity.
With so many available styles and types of treatments, don’t try to do all of them and be all things to all people. Instead, select a group of treatments that you want your salon to be well known for and stick to them, with the aim of outdoing your competitors.

Costs and earnings

According to HBA executive director Mary Davitt, buying an existing business premise, fitted out with basic equipment, will cost anywhere between $70,000 and $500,000, depending on the location and quality of the existing salon.

“Overheads can be quite expensive to initially stock the salon. It can be a bit like setting up your home kitchen in that it costs a lost to buy spices and nice oils and pantry items but, after the initial expense, you can restock as required,” she says.

“A lot of the time, you can negotiate great deals with product suppliers to reduce your cost, particularly if you are willing to use one product line or company exclusively.”

With regard to fitting out your venue, the cost is dependent 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 only a few hundred dollars, whereas laser machines could cost thousands.

Most salons operate on a 30-50% profit margin once you take out all of your costs including payroll and staffing. For example, if you charge $100 for a one-hour massage, you would expect a net return of at least $35.

An average day

An average day would include setting up therapy rooms, ordering and restocking, confirming appointments, consulting clients, performing treatments and managing cash registers.

You could also be expected to undergo training with suppliers on new products or techniques, and prepare for photo shoots or media presentations.

Depending on the type of salon, you may offer packages for weddings or hens nights, or other social and corporate events.

Ideally, your salon/spa will be fully booked from morning till night, seven days a week, but this is unlikely to happen straight away. Generally, salons and spas are quiet at the beginning of the week and heavily booked in the lead-up to the weekend.