How to Start a Salon Business and Budget for Monthly Expenses

  • Welcome to “Founder Finances”, a new Insider series that discusses founders’ monthly budgets.
  • In this story, a salon owner shares the budget that helped her book $ 30,000 in sales since December.
  • He says spending money on rent, its biggest cost, helps perfect the customer experience.

When Tillie Dixson was 18, she was trying to decide which college to attend, but was reluctant to spend money on a degree she wouldn’t use. In 2019, after graduating from high school, she enrolled in the cosmetology school at Aveda Fredric’s Beauty Institute.

Aveda’s teachings have focused heavily on the commercial side of the beauty industry, Dixson said. She graduated in 2020 and landed her first job at a local salon, but her goal was to one day open her own business. To do this, she had to build a solid following on social media, learn from other designers, and develop her own personal brand – steps other salon owners have told her are vital to building a sustainable business.

In December 2021, she moved to her salon space in Indianapolis, Indiana and launched her own business, called That1Studio, a semi-private studio offering shampoo, conditioner, styling and braiding services. Today, Dixson manages a monthly budget of $ 1,230 to keep the salon running and has booked more than $ 30,000 in sales since her studio opened nine months ago.

He shared his budget with Insider, including his most important cost: a high-quality customer experience that encourages customers to come back.

This is a story as told based on an interview with Dixson that has been edited for clarity and brevity.

Tillie Dixson, founder of That 1 Studio.

Tillie Dixson, the founder of That1Studio.

courtesy of Dixson

Here is the breakdown of the budget

Invest in your space for more personal services

I started working in a neighborhood concept salon opened in April 2021. In December 2021 I opened my studio.

My studio has room for one client at a time and the rent is $ 750 per month, $ 450 more than what I paid for my booth at the open-concept salon. But it’s worth it: since I went out alone, everything has grown steadily. In fact, my sales have been steadily increasing month after month since opening.

Something that has been really beneficial in going solo is the privacy to welcome all clients in the studio, regardless of gender, religion, or any personal hair aspect, such as hair loss or scalp problems. And I’m able to advertise to celebrities or high profile clients because it’s such an isolated experience.

Working alone provides that sense of privacy and security to my clients.

Dixson's personal salon suite

Dixson’s personal salon suite.


Think of innovative ways to improve the customer experience

While privacy helps in gaining new customers, I also focus on generating returning customers. I do this by prioritizing the customer experience – their time in the salon leads to word of mouth advice, which is key to business growth.

I invest in entertainment, furniture and cleanliness to create a positive environment. Entertainment costs me $ 30 a month and includes subscriptions to Netflix and Amazon Prime so customers can watch shows and movies while doing their hair or braiding, which can take hours at a time.

It is very important for me to understand my customer demographics, which I recommend other salon owners to do. Most of my clients are college students, so I know they love Netflix, as opposed to salons with an older clientele who might be more interested in reading magazines.

As for the decoration, I wanted my studio to be neutral, which I achieved through whites, blacks and shades of green, so that I could market myself to all genders. Green also helps add some liveliness to the studio.

It is not too expensive to budget these costs in my expenses and it makes the customer much happier.

Save money where you can as a new founder

As a solo founder, it can get really expensive to cover everything yourself. I save money for my business by doing many of the tasks myself. I am responsible for all my TikTok, YouTube, Instagram and advertising. I dedicate about 30 hours a month to these tasks.

I use TikTok not only to share the final versions of clients’ hair, but to document the whole process. That inside look shows clients exactly how I run my business and draws local clients into the salon, while also building an online community of other cosmetologists, braids, and hair clients.

But I don’t want to bite off more than I can chew, so as my clientele has grown and my sessions are almost always booked, I’ve decided to take some of the emphasis off advertising.

In addition, I deal with bookkeeping and accounting. I save my accounts until the end of each month and spend about four hours sorting out the finances for the entire month.

In the future, I would like to be able to outsource some of the backend activities. But for now, it’s in the company’s best interest to save the money and do it yourself.

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