How much does it cost to open a hair salon in the UK?

Typically £30,000 to £120,000 for a four to eight station salon outside London prime, with the fit-out as the largest variable. Taking a unit that was already a salon, with backwash plumbing in place, is the biggest saving available.

Is chair rental better than employing stylists?

Neither is better in general. Chair rental gives steady income, lower risk and often keeps the salon under the VAT threshold, but less control over the client experience. Employing stylists gives control and the full margin on services, with a much larger wage bill and VAT on turnover. The plan should model the one you intend to run, and some salons combine both.

Do I need a licence to open a hair salon?

Not for hairdressing itself in England. You may need registration or a licence from the local authority for treatments such as massage, cosmetic piercing, ear piercing or electrolysis, and in London many beauty treatments need a special treatment licence.

What profit margin does a hair salon make?

It varies widely with the staffing model. Net margins in the region of 8% to 15% are common for an established salon with employed stylists, higher for a well-let chair rental model. What decides it is chair utilisation against the wage bill and rent.

How do I forecast turnover for a new salon?

Multiply the number of stations by opening hours to get available hours, apply a realistic utilisation that starts low and builds, then multiply by the average bill per hour. If stylists bring existing clients, use their actual client numbers and visit frequency for the early months.

By industry

Hair Salon Business Plan

A salon sells time in a chair. Every decision in the plan — how many stations, who works them, how they are paid, what you charge — comes back to how many of those hours are sold and at what price. This guide covers the numbers a landlord and lender check, the choice between employed stylists and chair rental, and the VAT question that shapes most salon business models.

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Written by Clive Unitt FCA, Founder & Chartered Accountant

What a landlord or lender looks at first

Salons are a well-understood trade, which cuts both ways. Lenders know roughly what a salon of a given size should turn over, and they notice quickly when a plan does not add up.

Turnover built from chair hours. Stations, opening hours, the share of hours actually booked and the average bill per client. Those four figures produce turnover, and each one can be checked. A plan that starts from a turnover target and works backwards usually implies a utilisation no salon reaches.
Where the clients come from. A stylist moving with an existing column of clients is the strongest evidence a new salon can offer. Say how many clients, how often they visit and how many are likely to follow. A new salon with no following needs a longer ramp-up and the working capital to survive it.
How the team is paid. Employed stylists on wages and commission, self-employed stylists renting chairs, or a mix. Each model produces a completely different profit and loss, and a lender wants to see that you understand the one you have chosen, including its employment status and VAT position.
Rent that the chairs can carry. Take the rent, rates and service charge and divide by the number of stations. If each chair has to take a lot of money before it has covered its share of the premises, the unit is too expensive for the salon you are planning.

Typical startup costs

Fit-out dominates, and the plumbing is what drives it. A unit that was already a salon, with backwash plumbing and hot water capacity in place, can cost a fraction of converting a shell.

Cost	Typical range	What drives it
Fit-out and shopfitting	£15,000 – £80,000	Plumbing for backwashes, hot water capacity, electrics, lighting, flooring and reception. Far less if the unit was already a salon.
Styling stations and chairs	£600 – £2,500 per station	Hydraulic chair, mirror and unit. Durable commercial kit lasts; cheap chairs do not.
Backwash units	£800 – £3,000 each	Roughly one for every two or three stations, depending on the colour work you expect.
Equipment and small tools	£2,000 – £8,000	Dryers, steamers, trolleys, sterilisation, laundry. Beauty treatments add couches and specialist equipment.
Opening product stock	£2,000 – £6,000	Backbar for services plus retail stock. Some brands offer opening packages in return for a supply agreement.
Booking system and card payments	£300 – £1,500	Plus monthly fees. Deposits and no-show charges taken online pay for the system quickly.
Rent deposit and first quarter	£4,000 – £20,000	New companies are often asked for three to six months rent as a deposit.
Working capital	£8,000 – £25,000	Wages and rent while the column builds. The line most often missing from a first salon plan.

Indicative UK ranges for a four to eight station salon outside London prime. Use them to sense-check quotes rather than as a budget.

The numbers that decide whether it works

These are the figures a lender turns to first, and the ones SquarePlan calculates for you as you enter your sales and costs.

Chair utilisation: Booked hours as a share of available hours. New salons start well below this. A forecast that assumes established-salon utilisation from month one is the most common error in salon plans.
Wage cost to service turnover: For an employed team, including commission, employer National Insurance and pension. Above this range the salon is working hard to pay its staff and not much else.
Product cost: Backbar product used in services, especially colour. Retail sales carry their own margin, commonly around half the selling price, and should be forecast separately.
Rebooking rate: The share of clients who book their next appointment before leaving. It is the leading indicator of whether turnover will hold, and lenders to established salons ask for it.

Licensing and regulation

Hairdressing itself is lightly regulated in England, but several of the services salons add are not, and the rules vary by local authority. Check with your council before the treatment menu is printed.

Hairdressing registration: There is no mandatory licence to practise hairdressing in England. The Hair Council keeps a voluntary State Register, which some salons use as a mark of standards.
Special treatment and skin piercing licences: Treatments such as massage, electrolysis, tattooing, cosmetic piercing and some beauty services need registration or a licence from the local authority, and in London many are covered by special treatment licensing. Ear piercing counts. Check each service you plan to offer.
Chair rental and employment status: Renting chairs to self-employed stylists is common, but calling someone self-employed does not make them so. If the salon controls their hours, prices and clients, HMRC may treat them as employees. Structure it properly and put the terms in writing.
VAT: The registration threshold is £90,000 of taxable turnover over twelve months. A salon with employed stylists usually passes it and has to charge VAT on every service. Chair rental keeps each stylist's takings separate, which is one reason the model is popular, but the salon's own chair rent income and any bundled services still count, and the arrangement has to be genuine.

Build turnover from the chair, not the target

Every salon forecast should start with capacity. Take the number of stations and multiply by the hours the salon is open to get the hours available to sell. That is the ceiling, and no salon comes close to it. Some hours are always empty, and colour work, consultations and gaps between clients all use time that is not billed.

Apply a realistic utilisation, starting low. A new salon without an existing following might sell a third of its hours in the first months and build from there. A stylist bringing a full column might start far higher. Then multiply by the average bill per hour, which you get from your own price list and a sensible mix of cuts, colours and treatments rather than your most expensive service. The result is a turnover figure a lender can check, because every step in it can be questioned.

Decide the staffing model before anything else

The choice between employed stylists and chair rental changes almost every line in the plan, so it has to be made first.

With an employed team, the salon keeps all the service income and pays wages, commission, employer National Insurance and pension. It controls the prices, the rota and the client experience. It also carries the full wage bill in quiet weeks, and it will almost certainly be registered for VAT, which takes a large slice of every service price.

With chair rental, each stylist is a self-employed business paying the salon a weekly or monthly rent. The salon’s income is smaller but steadier, its costs are lower, and each stylist’s takings are their own, which is part of why the model is so common. The salon gives up control over much of how the business runs, and the arrangement has to be genuine: a stylist told when to work, what to charge and which clients to see may well be an employee in HMRC’s eyes.

Many salons run a mix. Whichever you choose, model it properly and say why you chose it.

The costs that get left out

Product used in services. Colour is expensive, and a salon doing a lot of it can spend a noticeable share of service turnover on backbar product. Cost it per service rather than guessing a monthly figure.

Training and education. Keeping stylists’ skills current costs money and chair time. Salons that skip it tend to lose stylists, and stylists take clients with them.

No-shows. A missed appointment is an hour that cannot be sold again. Deposits and cancellation charges reduce it, and the plan should say which you will use.

Where SquarePlan fits

SquarePlan asks for your stations, hours, prices, staffing costs and start-up spend, and builds the monthly cash flow, profit and loss and break-even point, with the VAT and payroll calculations underneath. You can compare an employed team with chair rental, or see what a different utilisation does to break-even, while you are still choosing a unit rather than after you have signed for one.

How this gets funded

Salons are asset-light, so bank lending tends to be modest, and most openings are funded from a mix of personal money, a Start Up Loan and equipment finance.

Start Up Loan: Government-backed personal loans of up to £25,000 per person at a fixed rate, with mentoring. Needs a full business plan and cash flow forecast, and is a common route for a stylist opening a first salon.
Equipment finance: Chairs, backwashes and specialist beauty equipment can be leased or bought on hire purchase, spreading the cost and protecting the cash buffer.
Supplier support: Professional product brands sometimes contribute to fit-out or opening stock in return for an exclusive supply agreement. Model the product prices over the full term before accepting.
Bank lending: More realistic when buying an established salon with a trading record, or expanding an existing one, than when opening a first unit from scratch.

Frequently asked questions

How much does it cost to open a hair salon in the UK?: Typically £30,000 to £120,000 for a four to eight station salon outside London prime, with the fit-out as the largest variable. Taking a unit that was already a salon, with backwash plumbing in place, is the biggest saving available.
Is chair rental better than employing stylists?: Neither is better in general. Chair rental gives steady income, lower risk and often keeps the salon under the VAT threshold, but less control over the client experience. Employing stylists gives control and the full margin on services, with a much larger wage bill and VAT on turnover. The plan should model the one you intend to run, and some salons combine both.
Do I need a licence to open a hair salon?: Not for hairdressing itself in England. You may need registration or a licence from the local authority for treatments such as massage, cosmetic piercing, ear piercing or electrolysis, and in London many beauty treatments need a special treatment licence.
What profit margin does a hair salon make?: It varies widely with the staffing model. Net margins in the region of 8% to 15% are common for an established salon with employed stylists, higher for a well-let chair rental model. What decides it is chair utilisation against the wage bill and rent.
How do I forecast turnover for a new salon?: Multiply the number of stations by opening hours to get available hours, apply a realistic utilisation that starts low and builds, then multiply by the average bill per hour. If stylists bring existing clients, use their actual client numbers and visit frequency for the early months.

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Clive Unitt FCA

Founder & Chartered Accountant (FCA)

Clive is a Fellow of the Institute of Chartered Accountants in England and Wales and the founder of SquarePlan. He has spent over thirty years working with businesses from sole traders to multinational public companies.

He writes here about business planning, financial projections and the UK tax and funding questions that come with starting out.

More about Clive → ICAEW member record Companies House LinkedIn

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