Learn about trends in the Beauty Salon, Hair Salon and hair care services business and where to find more info about how to open your own Beauty Salon. Don’t forget you can receive free or low-cost training and free professional business advice, from your local Small Business Development Center!
Beauty Salon Business Overview & Trends, 2012
SIC Code: 7231, 7241 NAICS Code: 812111, 812112
This Beauty Salon industry summary is from First Research which also sells a full version of this hair care services industry report.
The US hair care services industry includes about 86,000 establishments (82,000 beauty salons; 4,000 barber shops) with combined annual revenue of about $20 billion. Major companies include Regis, Ratner Companies, Premier Salons, and Sport Clips. The industry is highly fragmented: the 50 largest companies generate about 15 percent of revenue.
Demand is partly driven by demographics and partly by population growth. The profitability of individual companies depends on technical expertise and marketing skills. Big companies have few advantages over small ones, which is why the industry remains fragmented. Small companies can compete successfully through technical superiority or favorable location. The industry is labor-intensive: average annual revenue per employee is about $45,000.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products are hair cutting, hair coloring, nail care, skin care, and merchandise sales. A typical salon offers haircutting and styling, coloring, shampooing, and permanents. Some salons also offer nail care, facial treatments, makeup, bikini waxing, massage, tanning, and other types of spa treatments, but the lower volume of demand for such specialty services often makes them uneconomical. Sales of hair care products are an important revenue source for many salons, providing from 5 to 15 percent of revenue. Gross margins are higher for hair care products than for services.
A typical salon occupies about 1,000 to 1,500 square feet and is located in a mall or strip center.
The following Beauty Salon market research report summary is from IBISWorld which also sells a full version of this report.
- …Revenue growth is expected to improve over the next five years, rising at an average annual rate of 3.3% to $49.3 billion by 2017…this will be driven by an expected increase in per capita disposable income and declining unemployment toward the end of the five-year period…higher disposable incomes could also lead hair salon customers to spend more on higher-value services like manicures, pedicures, facials, hair modification treatments, and massages.
- …Industry profit is also expected to see gains which could encourage more new businesses to enter the industry…profits are projected to increase from 5.5% in 2012 to 5.9% by 2017. Profit gains will be mainly due to increased sales of higher-value products which have larger profit margins…Improving market conditions will increase the number of industry operators at an average annual rate of 3.7%, reaching 1.3 million operators by 2017.
- …This growing number of industry operators will drive employment growth. The slowly improving job market will continue to contribute to higher enrollments at cosmetology schools. This continued trend, combined with the growth in new industry operators, is expected to drive beauty salon employment upwards at an average annual rate of 3.8%, reaching 1.8 million employees by 2017.
Hair Salon Customer Demographics
The following facts are from Best Customers: Demographics of Consumer Demand, which provides detailed information on consumer demographics for many industries. This resource, and other demographics and marketing materials are available for purchase from New Strategist.
Personal Care Services
The largest households and older householders are the best customers of personal care services such as haircuts, massages, manicures, and facials. Householders aged 35 to 64 spend 10 to 14 percent more than average on this item. Married couples without children at home (most of them empty-nesters) spend 26 percent more than average on personal care services, while those with school-aged or older children at home (the largest households) spend 34 to 38 percent more than average.
Hair Care Products
The best customers of hair care products are the largest households and households with the most women. Married couples with children at home spend 48 percent more than average on this item, the figure peaking at 83 percent more than average among couples with adult children at home.
Householders aged 35 to 54, many with children at home, spend 24 to 32 percent more than average on hair care products and control 52 percent of the market.
Beauty Salon Startup Costs
- Total startup cost: $100,000 +
- Franchises Available? Yes
If you are thinking about buying or selling a beauty salon or hair salon, consider these rules of thumb for valuing a hair salon business from The Essential Guide to Pricing a Business:
- 35 percent annual revenue and fixtures, equipment and inventory
- 2 times SDE plus inventory
- 4 times monthly sales plus inventory
- 2.5 times EBIT
Beauty Salon Business Plans
- Hair and Beauty Salon Business Plan
- Hair Salon Business Plan
- Barber Shop and Men’s Salon Business Plan
Beauty Salon Articles
- Salon Industry Trends For 2012 and Beyond
- Economic Snapshot of the Salon and Spa Industry
- Nails Magazine 2010 Industry Statistics
- Professional Beauty Association Salon/Spa Performance Index (SSPI)
Hair Salon Media Outlets
Beauty Salon Associations
Trade associations often are excellent sources of information on an industry. Here are some relevant industry associations:
Hair Salon Licensing Requirements
- Information on Hair Salon, Beauty Salon and Barber Shop business licensing requirements in your local area.
Beauty Salon Social Media Outlets
Beauty Salon Employment Trends
The median hourly wage of barbers, hairdressers, and cosmetologists was $10.82 in May 2010. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less.
Median hourly wages for occupational specialties in May 2010 were as follows:
- $11.45 for barbers
- $10.94 for hairdressers, hairstylists, and cosmetologists
- $8.78 for shampooers
Many barbers, hairdressers, and cosmetologists work part time. However, some self-employed workers have long hours. Work schedules often include evenings and weekends―the times when beauty salons and barbershops are busiest. Those who are self-employed usually determine their own schedules.
Barbers, hairdressers, and cosmetologists held about 712,200 jobs in 2010. Nearly half were self-employed.
Employment in the detailed occupations that make up barbers, hairdressers, and cosmetologists was distributed as follows:
Hairdressers, hairstylists, and cosmetologists 627,700 Barbers 62,200 Shampooers 22,300
Barbers, hairdressers, and cosmetologists work mostly in a barbershop or salon, although some work in a spa, hotel, or resort. Some lease booth space in other people’s salons. Some manage salons or open their own after several years of experience.
Barbers, hairdressers, and cosmetologists usually work in pleasant surroundings with good lighting. Physical stamina is important, because they are on their feet for most of their shift. Prolonged exposure to some chemicals may cause irritation, so they might wear protective clothing, such as disposable gloves or aprons.
Many barbers, hairdressers, and cosmetologists work part time. However, some self-employed workers may have long hours. Work schedules often include evenings and weekends―the times when barbershops and beauty salons are busiest. Those who are self-employed usually determine their own schedules.
Overall employment of barbers, hairdressers, cosmetologists, and shampooers is expected to grow 14 percent from 2010 to 2020, as fast as the average for all occupations. Growth rates will vary by specialty.
Employment of barbers is projected to grow 7 percent, slower than the average for all occupations. The need for barbers will stem primarily from an increasing population, which will lead to greater demand for basic hair-care services.
Employment of hairdressers, hairstylists, and cosmetologists is projected to grow 16 percent, about as fast as the average for all occupations. Demand for hair coloring, hair straightening, and other advanced hair treatments has increased in recent years, a trend that is expected to continue over the coming decade.
Employment of shampooers is projected to decline 9 percent as more barbers, hairdressers, and hairstylists perform shampooing services themselves.
Overall job opportunities for barbers, hairdressers, and cosmetologists are expected to be good. A large number of job openings will stem from the need to replace workers who transfer to other occupations, retire, or leave the occupations for other reasons. However, workers should expect stiff competition for jobs and clients at higher paying salons, of which there are relatively few and for which applicants must compete with a large pool of experienced hairdressers and cosmetologists.
Because employment of shampooers is expected to decline, job opportunities should be somewhat limited, available only from the need to replace those who leave the occupation.
For the full text of any content in this Small Business Market Research Report from SBDCNet, the link has been provided for the report publisher, while a database article can be obtained from the local public or academic library or purchased from a document delivery service for a nominal fee.