Nail salon business model – how to start and market a profitable nail salon

In 2017 the average price for nail salon services was $20.93 in the United States. That was the highest amount since 2005. In total about $8.5 billion was spent in the nail salon industry. Overall, it is a great time to be in the nail salon business.

Starting a nail salon business is not without its challenges. In 2013 there were 48,900 nail salon businesses in operation. Thanks to a mini-boom in the industry this number skyrocketed to 130,000 just two years later. By 2017 that number had dropped back down to 56,300.

For the remaining nail salons this was actually great news. The number of customers had increased, but with fewer competitors. This makes it a great time to enter the nail salon industry. But, to be successful you need to plan carefully.

This guide lays out what you need to know about how to start and grow a nail salon business.

How to start a nail salon business

Before you start your nail salon business there are few basic factors that you need to consider.

Budget

To start your nail salon business you will need to ensure you have access to adequate capital. As detailed below the typical size of a nail salon will be between 1000 and 1500 sq ft. Costs for building out a nail salon typically range between $75 to $125 per sq ft. This means that you can expect to spend anywhere between $75,000 and $187,500 to fit out your nail salon. On top of this will be additional start-up costs including marketing, legal and labour that need to be factored in.

Legal entity

To ensure your nail salon is properly protected you will need to establish a legal entity for the business. The most common of these is an LLC (Limited Liability Company). This is not the only potential business structure, so you will need to look at which will best suit your needs.

Business bank account

Along with forming the right legal entity, a business bank account will help to ensure that your personal assets are protected. Dedicated business banking helps separate your nail salon and personal finances.

How profitable is a nail salon business?

Over the course of twelve months, 30% of nail salon prices were able to increase their prices by 30%. What’s more, looking at a longer time frame of 1–2 years, an additional 23% of nail salons said they decreased their prices.

In contrast, over the same time frame less than 1% said that they had to decrease their prices. This ability to raise prices points towards a more profitable trading environment for nail salon businesses. This could be in part thanks to falling number of competing salons within the industry.

How to get a nail business license

In order to operate your nail salon there will be certain permits and licenses that you need to acquire. This exact requirement can vary significantly depending on the country or state that you plan on operating in. In general, you can be expected to need to obtain the following as a minimum:

• Business license
• Building permit
• Training that meets state requirements

Choosing your nail salon location

There is no one right location for all nail salons. The “perfect” location will depend on the type of clients you want to attract, the business you are operating and the type of services you want to provide. Some key considerations include:

• Are you targeting a low budget or higher end clientele?
• Will you take clients by appointment only or do you want to attract walk in customers?
• Are you offering a speciality nail service?

The answers to these questions should help to define the type of location that will be suitable – and those that are not. Here are some of the things to consider:

• Car parking. Unless you are operating in the middle of a major city like New York, Paris, Shanghai or London, then a lot of your clientele will want to drive to your nail salon. This means that there needs to be plenty, ideally free, parking.
• Visibility. A good location will have plenty of visibility from the road and be easy to find. This needs to be balanced against cost, as an area that is too busy may be financially unviable due to high rents.
• Size. Typically you are looking for a location that is between 1000 and 1500 sq. feet. Larger than this and the costs will be prohibitive, smaller and you won’t have sufficient space to operate.
• Demographics. Household income is a key consideration when choosing the right location. Getting this wrong can make it difficult, if not impossible, to succeed. If you want to charge high end prices, then you need to operate in a location where there are sufficient customers who can afford this service. If you are targeting a higher volume, lower priced business model you still confirm that the average income in your area will provide sufficient customers for you to target.

How to grow a nail salon business with email marketing

80% of retail small and medium (SME) businesses said that email marketing was their most effective tool for retaining customers. As the statistic despite the introduction of new marketing channels, email remains one of the most effective ways to market your salon. Email allows you to develop a relationship with existing and potential clients over a period of time. It allows you to reach them directly in their inbox. And perhaps most importantly your email marketing list is an asset that you completely own. Unlike marketing on Facebook or Instagram it is not dependent on changes to those platforms.

Email marketing can be implemented in two ways: automated or manually. A manual approach to email marketing would be to run a weekly newsletter. Each week you might include in the newsletter your latest beauty tips, recommended products and news updates. This content of this newsletter will be unique for that week and released manually. A weekly, bi-weekly or monthly newsletter has the advantage of being time relevant. This means you can tie into your email promotions that might relate to a specific time period, for example a Black Friday sale.

The other alternative is to use an automated email sequence. This is a series of emails that people receive after a certain trigger is activated. An example of this would be everyone who registers on your website receives a predetermined series of emails. These emails would introduce the client to the salon, perhaps offering them a discount voucher in order to encourage them to rebook an appointment. The benefit of an automated email sequence is that you only need to set it up once. Once in place it will market your salon on autopilot.

These two approaches are not mutually exclusive. You can have an automated email sequence in place and also market through a regular newsletter. Once you have setup these types of email marketing, one approach that will really help to take your email marketing to the next level is segmentation. Segmentation is where you create a specific email campaign based on the preferences and/or demographics of the recipient.

How to boost a nail salon business with local SEO

47% of all searches on Google are for local business. Local Search Engine Optimisation (SEO) is targeting geo-specific search queries on Google. A good example of a search that is geo-specific is “Brooklyn nail salon” or “nail salon near me”. When someone enters one of these search queries, Google knows that the user wants to find a nail salon in their local area.

Targeting these types of searches can be extremely profitable, because they have a very high propensity for converting into clients. They have both indicated that they are interested in nail salon services and that they live in the local area. The fact that they probably live locally means that they are also more likely to become recurring customers. This is an advantage of other means of marketing like coupon sites which have a higher propensity for attracting one-off customers.

Luckily Google makes it relatively easy to target local customers. They offer the Google My Business service where all of the information about your business can be listed. To list your salon with Google My Business you will need to enter the name of your business and verify your address. This will need to be the actual physical address where you will be operating the salon from. Google will verify your address by sending you a postcard with a unique PIN number. You will enter this PIN number in the dashboard of your Google My Business account.

If you were to summarise the secret to a good Google My Business profile it is completeness. Google My Business provides you with a lot of areas to list relevant information about your salon. You want to make sure that you take advantage of as many of these as possible. Included among these are your salon’s hours of operations. This includes the option to customise opening hours for any special events or on holidays. People can be lazy about this section, but it is a good idea to be as accurate with this as possible, as potential customers will use Google as an indication of whether to turn up or not. Incorrect hours can lead customers to either not turning up when you are in fact open or arriving and becoming disappointed because you are closed.

Pay specific attention to the photography section. Uploading high quality photos of your salon, products and services is one of the best ways of positioning your business. Google My Business also allows you to share mini posts about your business. This is an option that you will want to take advantage.

Another important aspect of Local SEO is NAP (Name, Address and Phone number) citations. A citation is where another website references the NAP of your salon business. Google uses this as a signal of the credibility of the business. There are two main factors with NAP citations: the number and consistency. You want to have your NAP citations placed in a large number of places to build the credibility of your salon. This is a relatively straightforward, if somewhat laborious, task. Here is a list of places where you can list the details of your salon:

List of local NAP citation sources: https://whitespark.ca/top-local-citation-sources-by-country/

Lastly, and perhaps most importantly, are reviews. Google reviews are particularly for the successful marketing your salon. Numerous, positive reviews can positively impact your business in a number of ways. Google uses reviews as a ranking factor. A salon with a larger number of positive reviews is more likely to outrank one that has fewer. Reviews also tend to help a salon stand out in the search listings. These reviews stars will often appear just under the name of the salon in the search list. A salon that has 50 five-star reviews is far more likely to be clicked on compared to one that only has two or three.

Reviews also act as a very important form of social proof. Potential clients will use these stars a guide of whether to try your services or not. Google reviews have a higher degree of credibility compared to some other rating systems because they are viewed as more likely to be genuine. There will therefore be a direct relationship between the number of positive reviews and the number of new clients that your business acquires.

Minimising no-shows with a manual or automated booking system

A constant bug bear of salon owners is no-show customers. These are customers who fail to turn up at their booked appointment time. No-show customers cause two issues. Firstly, there is the lost revenue from the missed appointment. Secondly, it is a slot that could have been used by a paying customer. There is no worse feeling than having what on paper looks a fully booked salon, but in practice turns out to be half empty – especially if you have turned away customers.

There are two types of no-show customers. There are those customers that fail to turn up altogether. These will frequently never show at your salon again. There are also those who fail to turn up at their appointed time but decide to rebook. Of the two the latter is far less of a problem. You will still recoup the revenue in the future from the clientele and a certain amount of rebooking can be worked into your business model.

No-show are difficult to avoid altogether but having a system in place to minimise them can have a significant positive impact on your business. In order to reduce the number of no-shows you can do the following:

• Consider a deposit. If you are using an online booking solution like Bookly then you can take partial, or full payment as a deposit for the appointment. You may find that there is push back on charging a deposit as many salons don’t do this. You will need to make a judgement call about balancing the reduction in no-show’s vs a lowered number of people making bookings.
• Take clientele details. Take the details during the booking process. If you are using booking forms on your salon website, then this should be a required field. Staff should be trained to take a phone number and email address as well.
• Remind your customer. This is why it is so important that you take the details of your customers. Remind your customer of their appointment leading up to their appointment with SMS message or email. This should include the time, date and ideally location of their appointment.
• Setup up automated notifications. If you have a manual process for sending reminder notifications then there is a very good chance that occasionally the process won’t be performed. The best way to avoid this is through automated notifications. A booking system like Bookly allows you to setup up customisable SMS and email notifications, which avoids this issue.

Introducing Bookly can not only help to reduce the number of no-show appointments. It can help to streamline your entire booking and staff scheduling process. Using Bookly’s customisable forms you can enable clients to book an appointment any time of day. Appointments will then be automatically added to available nail technicians work calendar.

Conclusion

The overall prospects for nail salon businesses is good. The reduction in the total number of nail salons, has likely contributed to an improved business environment for existing salons and new entrants. Nail salons that are able to successfully implement online marketing and optimise their booking process, should see strong demand for their services.