The art of nail decoration has been an aesthetic practice for centuries. Today, the manicure and pedicure industry is flourishing, earning its place as one of the top sectors in the beauty and wellness market.
Here are some things to know before opening a nail salon business.
Do your research
In today’s highly competitive market, your nail business needs to stand out.
Market research is essential for determining if there is a demand for your salon and if people are willing to pay for it. Research your potential customers, their spending habits, the overall market, competitors, and the opportunities for growth and differentiation. Without thorough market analysis, you won't be able to tailor your business to your target market or differentiate yourself from the competition. This could leave you with a generic business that new competitors easily overshadow.
For more information, see How to do a market analysis.
Write a business plan
A business plan defines your business, what products and services you offer, and how your company will run. It can also help you make important decisions, set goals for growth, and spot potential risks. Plus, having a solid business plan can make it easier to get financing or bring in new business partners.
Here’s a suggested outline for your nail salon business plan:
- Executive summary: A brief overview of your business and why it will be successful.
- Company description: Include detailed information about your business and explain your competitive advantages.
- Service and product offerings: List the types of services and products your nail salon will offer.
- Organization and management: Outline how your company will be structured and who will run it. For example, will it be a partnership, LLC, or S-Corporation? Who will be responsible for the day-to-day management?
- Market analysis: What is the industry outlook? Who are your target customers? What competition are you up against?
- Financing plan: Include a description of your funding requirements, your detailed financial statements, and a financial statement analysis.
- Marketing strategy: What is your overall plan for reaching potential consumers and converting them into customers for your products or services? How will you communicate your advantages to potential competitors? Keep in mind that the competition may include at-home treatments as well as other nail salons.
Select a business structure
Your choice of business structure – whether it’s a limited liability company (LLC), corporation, or partnership – will impact your daily operations, taxes, and the liability risk you’re willing to take with your personal assets. Choose a structure that balances legal protection and benefits.
The four most common are:
- Sole proprietorship: This means that the business is owned and run by one person with no legal distinction between the owner and the business.
- General partnership: A general partnership is the most straightforward variety of partnerships and is created automatically when two or more persons engage in a business enterprise for profit. No state filing is required.
- Limited liability company (LLC): This is one of the most popular forms of business entity among nail salon owners. An LLC offers limited liability protection (shielding your assets by protecting them from debts and liabilities associated with the company) and pass-through taxation.
- Corporation: A corporation is a separate legal entity owned by its shareholders, protecting owners from personal liability for corporate debts and obligations.
For more information on business entity structures, read Comparing company types.
Know nail salon licensing and permit requirements
Most small businesses require some form of business license or permit to operate. These requirements vary depending on the type of business, its location, and the regulations in place.
Examples of the licenses you might need to obtain include a basic business license, zoning permits, occupancy permit, and sign permit.
In many states, both salon owners and technicians must have a cosmetology or nail technician license. To get this license, you'll usually need to finish a state-approved training program and pass both a written and practical exam.
Visit your state and local government websites to determine the specific licenses and permits you will need for your business. Additionally, remember to keep track of when your licenses need to be renewed and manage them accordingly.
Understand other legal requirements for your nail salon business
Your nail salon business may be subject to various other legal requirements in addition to licensing.
For example, you may need to register with the Department of Revenue in your state.
If you plan on hiring employees, you must also obtain an EIN, register with the Department of Labor in your state, and handle payroll. You will also need an EIN if you form an LLC or corporation.
Other requirements include getting a registered agent and filing a Beneficial Ownership Information Report with FinCEN.
Lastly, if you intend to do business under an assumed name (also known as a trade name or fictitious business name), a DBA filing must be made with either the state or local jurisdiction.
For more information, see What are the legal requirements for starting a small business?
Open a business bank account and credit card
By law, corporations and LLCs must keep their business and personal finances separate. The best way to achieve this is by opening a bank account and obtaining a business credit card. These should be used exclusively for business expenses to maintain liability protection in case of legal action against the business.
A business credit card can help you build credit and negotiate good terms with vendors and suppliers. Try to open a business bank account when your nail salon business starts incurring expenses or accepting money.
Obtain necessary insurance
Some states require nail salon businesses to obtain insurance or a bond. However, you should still obtain insurance, even if it’s not required by the state. For instance, forming your business as an LLC or corporation can protect your personal assets in most instances. But this doesn’t protect your business from other risks.
If you have employees, your business will most likely need to obtain unemployment insurance through the state’s Department of Labor.
Frequently asked questions for nail salon businesses
What permits and licenses do you need to open a nail salon?
License requirements can vary depending on your state and local jurisdiction.
Here are examples of licenses and permits you may need to open a nail salon business:
- Nail salon or cosmetology license: Nail salon owners and technicians must have a cosmetology or nail technician license in most states.
- Basic business operation license: This is a license from the city in which your business will operate or from the local county (if the business will be operated outside of the city's legal boundaries).
- Home occupation permit: This permit for home-based businesses aims to make sure that a business doesn't cause a lot of extra traffic, noise, or other things like dust or smells that would bother the people who live nearby.
- Zoning permit: Some states require proof of proper zoning for the nail salon business.
- Building permit: If you plan on remodelling or building a commercial space, you'll need a building permit.
- Sign permit: Many local governments require a permit for sign displays and installations
- Sales tax license/sellers permit/resellers permit: You need a license or permit to sell almost anything, and the name of this document varies by state.
- Certificate of occupancy: This document outlines the purpose of the structure and its suitable applications and ensures compliance with building codes.
How do I start a nail business at home?
Before starting a nail business at home, it's crucial to verify if this business activity is allowed in a residential area. You can check with your local zoning department to see if you need a Home Occupation Permit.
Even if a permit is not required, it's a good idea to find out if your neighborhood is zoned for the type of home business activity you plan to conduct. If it isn't allowed, you may be able to apply for a variance or conditional-use permit.
Additionally, if you live in a planned residential neighborhood or complex, your Homeowners Association (HOA) may restrict the business activities you can conduct in your home. Remember that a home-based business has many of the exact requirements of a business with a commercial storefront.
For more information, see How to start a business from home
How much does it cost to open a nail salon?
The cost of opening a nail salon can vary significantly depending on your location and the size of your business. You will need a table, chair, and drying lamp for each station. A pedicure chair can cost anywhere from $1,000 to $8,000, and even more for luxury models.
If you're considering purchasing an existing salon, be prepared to spend between $50,000 and $250,000 or more.
In certain states, you may be required to obtain a bond or liability insurance. For instance, in New York, you must have accident and professional liability insurance of at least $25,000 per individual occurrence and $75,000 in the aggregate.
Additionally, there are ongoing expenses for rent, utilities, payroll, products, marketing, and more.
