10 Steps to Starting a Nail Salon

Lauren WardUpdated January 9, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Nail salons represent an $8 billion industry in the U.S. While many salons closed their doors during the pandemic, the industry is rebounding and expected to grow steadily in 2023 and beyond. If you’re thinking about opening your own nail salon, this could be an opportune time. Just keep in mind that this type of business can be vulnerable during economic downturns. And, just like starting any small business, you’ll need to invest a fair amount of time, effort, and money to get your salon up and running. Still game? Here’s what you need to know.

Pros and Cons of Opening a Nail Salon

Pros of opening a nail salon	Cons of opening a nail salon
Creative work everyday	Potential for lots of competition
Become your own boss	Usually need startup capital
Relatively simply business model	Overhead costs lower your profit margins
Easy to start small and scale at your own pace	Vulnerable during economic downturns

How Much Does It Cost to Open a Nail Salon?

The cost of opening a nail salon will depend on the location, whether you buy or lease a space, and how luxurious you want to make your salon. Purchasing an existing salon can run anywhere from $40,000 to $250,000.If you purchase property for a salon, it can cost anywhere from $100,000 to $500,000 to build a salon from the ground up. If, on the other hand, you lease a space, you can expect to spend anywhere from $2,000 to $60,000 to get the right location rented and built out for your nail salon.

1. Coming Up With a Business Plan

The first step of starting any kind of business is to write up a business plan. This requires doing some local market research to determine how much of a need there is in the area you’re looking at. If there is already a lot of competition, the market may be oversaturated. But if the neighborhood is growing and existing salons are constantly booked, then there could be a demand for another location. You’ll also want to assess your startup and ongoing costs (which will require getting quotes on rent, insurance, and more) and create a budget. This information will help you determine if you’ll need to get a beauty salon loan or other type of financing. And. if you do end up applying for a loan or approaching investors, having a strategic business plan can help improve your odds of securing that funding.Your business plan should also include what services you’ll offer, what you’ll charge, how many customers it will take to cover your costs, and when you expect to start seeing a profit.

2. Finding Funding

It can be difficult to cover all the costs of opening a salon using only your savings. As a result, you may need to raise some capital at the beginning that you will pay off during your first year when the salon is up and running. Here are some options.

Business Loans

There are several different types of small business loans. With a traditional term loan, you get a lump sum of money up front then pay it back, plus interest, over time according to a predetermined schedule. Loans from banks and Small Business Administration (SBA) lenders tend to offer the most competitive rates and terms, but have strict qualification requirements. Online lenders tend to be more flexible (and faster to fund) but generally charge higher interest rates and offer shorter loan terms. It can be a good idea to shop around and compare small business loans before you make any financing decisions.

Peer-to-Peer Lending

With peer-to-peer (P2P) lending, you borrow money from individuals and institutions through a P2P lending platform, which acts as a middleman between borrowers and lenders. P2P loans tend to be more accessible than business loans from a bank or credit union. So, if you’re having difficulty qualifying for a bank loan due to poor credit, a P2P loan could open up the door to funding for your nail salon.

Business Grants

You might also want to explore small business grants for women and minorities. There are a number of grants offered by nonprofits, government agencies, and large companies aimed specifically at helping underrepresented business owners get started. Two good places to start your search include the government database Grants.gov and your local Small Business Development Center.

3. Opening a Business Bank Account

To keep your business and personal finances separate, it’s a good idea to open up a business bank account for your salon. This will make it easier to manage your small business accounting and simplify your life when it comes to filing your taxes. You’ll need to have a few documents in place in order to open a business bank account. These include:

An employer identification number (EIN) from the IRS
Formation documents and ownership agreements
Business license

4. Finding a Location

The location of your nail can have a major impact on its success. It will affect who will show up, how much you’ll pay in rent or on your mortgage, and how much you can charge your customers. You’ll ideally want to be located in close proximity to high-traffic areas, such as shopping centers, since walk-ins typically make up a large portion of nail salon sales. Rents in prime locations, however, tend to be higher due to more traffic and visibility. You may want to start out by leasing a location instead of buying outright, since this will lower your startup costs.

5. Acquiring Proper Licensing and Permits

The type of licenses and permits you’ll need to open a nail salon will depend on your city and state. You may need a business license, sales tax permit, EIN, and Occupancy Permit. Your state will likely also require all nail technicians to have a cosmetology license.You’ll also want to contact your local health department to determine their policies for nail salons and their staff. Most states also require regular inspections to ensure safety standards are being met.

6. Choosing a Business Structure and Registering Your Business

When you start a business, you’ll need to choose a business structure. There are four options to consider:

Sole proprietorship
Partnership
Corporation
Limited Liability Company (LLC)

Each type of business entity has its own pros and cons, such as liability exposure, costs, and administrative requirements. As with many small businesses, you may decide that an LLC is your best bet. Setting up an LLC is relatively easy and inexpensive and protects you from personal liability – only the amount of money you put into the business is at risk should you ever get sued by a customer.

7. Getting Insured

Speaking of getting sued, you’ll want to make sure that your salon is adequately insured. A typical salon needs:

General Liability Insurance This protects against any claims caused by bodily injury, property damage, and personal injury that arise from your salon business operations.
Commercial Property Insurance This covers costs associated with repairs, as well as loss of income, due to damage of building and salon equipment.
Professional Liability Insurance This protects against claims that your professional advice or salon services caused a client financial harm.
Workers Compensation Insurance This covers your employees lost wages and medical treatment in case of injury and is mandatory in almost all states.

Some insurance companies offer something called a Business Owner (or Umbrella) Policy, which is a combination of insurance policies that are needed for business owners which can be a more cost effective option.

8. Marketing

There are many ways you can advertise a new nail salon. In addition to traditional marketing methods, such as posting signs in the neighborhood and direct mail campaigns, you can also promote your business with online marketing. Here are some ideas to consider:

Create a website with your location, services, hours, and appointment booking
Claim your business on Google Maps
Create social media accounts
Encourage customers to post their finished looks
Run Google or social media ads
Collect customer email addresses and create a newsletter with updates and occasional discounts

Of course, you don't have to do everything at once. Take your marketing plan one step at a time and grow it organically as your business starts to take off.

9. Hiring Employees

Before opening day, you’ll likely need to hire employees. In addition to nail technicians, you may want to hire a receptionist to take calls, manage reservations, and check-in customers when they arrive. You might even consider hiring a part-time or freelance marketing specialist to help your salon gain more visibility.

10. Finding an Accountant

You probably don't need a full-time accountant for your nail salon. However, it may be worthwhile to enlist the services of an outside accountant to help you set up your small business account software, make sure you’re complying with local sales tax laws, set up payroll, determine your quarterly tax payments, and help you file your taxes at the end of the year.

The Takeaway

Opening a nail salon can be a great way to flex your artistic and entrepreneurial muscles at the same time. Demand for nail services is typically year-round, and nail salons can be lucrative if you set yourself up for success. That means choosing a great location; getting the right licenses, permits and insurance; lining up financing; hiring ace employees; and spreading the word with savvy marketing.

3 Small Business Loan Tips

Online lenders generally offer fast application reviews and quick access to cash. Conveniently, you can compare small business loans by filling out one application on Lantern by SoFi.
If you are launching a new business or your business is young, lenders will consider your personal credit score. Eventually, though, you’ll want to establish your business credit.
SBA loans are guaranteed by the U.S. Small Business Administration and typically offer favorable terms. They can also have more complicated applications and requirements than non-SBA business loans.

Frequently Asked Questions

How profitable are nail salons?

Can you start a nail salon from home?

How much money do you need to open a nail salon?

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About the Author

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.

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