If you have been thinking of opening your own beauty supply store but are not sure about the expense, then you may want to consider the following costs.
You can expect the cost of opening a beauty supply store to cost you an investment of at least a minimum of $100,000 in cash and to have a net worth of at least $300,000. There will be a franchise fee of at least $25,000 if you are going with an established beauty supply line.
The minimum total investment will cost a minimum of $184,400 to as much as, $290,500 on the high end. The royalty fee will be on average 4-6 %. However, if you go independently your cost will range between $500 and $500,000 depending on what factors you choose.
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How Much Should You Expect It to Cost to Open a Beauty Supply Store?
Depending on whether you choose to go with a franchise or try to open a beauty supply store on your own will largely depend on the actual costs. Each franchise has slightly different financial requirements, as well.
All franchises require at least a $100,000 cash investment, and a franchise fee of $25,000. The royalty fee standard seems to be 4 to 6 % across the board.
The hefty cost to get started in a beauty supply store is only a small portion when you consider that in the United States the sales revenues range from around $21 billion, and this is expected to grow by 4.7 % by 2022.
| Costs to Starting a Company | Franchise | Independent Company |
| Franchise Fee | $25,000 | $0.00 |
| Minimum Cash Investment | $100,000 | $5000 to $500,000 |
There are two ways to start a beauty supply store: from scratch and with a franchise.
What are the Advantages of Buying a Franchise?
There are several advantages involved with buying a franchise instead of starting from scratch.
Branding
Perhaps the number one reason to start your beauty supply company as a franchise is the brand. Franchise business have already put in the time and the money it takes to build up a brand.
It can take months even years to build up a brand with an excellent reputation and a customer base. Since most start-ups that fail do so in the first year having a store that is already liked and respected can be a huge advantage to succeeding.
Corporate Support
When you buy a franchise, you have the support of a team of professionals who are already invested in your success. They can offer much-needed advice and expertise on a variety of different issues that might come up.
Some corporate support can be in training to your employees and yourself. Sometimes support can come in the form of small loans to help with some startup costs or advertising to help establish your new business.
What are the disadvantages of Having a Franchise Compared to an Independent Business?
There can be a few disadvantages of having a franchise instead of just starting your own business on your own.
Costs
Whether you start a business as a franchise or own your own there are lots of costs involved, but it can cost more when going as a franchise because they may require you invest a larger amount than if you started a business otherwise.
A certain percentage of your sales are paid as royalties to the corporation for allowing you to use their name and branding.
If they do advertising, you may be required to pay a percentage of it for enjoying the benefits of it. This is often around 2 to 3 %.
Following Policies
One reason many people want to own their own business is to be their own boss, however if you are part of a franchise, you would have corporate policies you will still need to follow just like if you worked for someone.
For example, corporate may think you and your employees should wear uniforms when you would rather wear something else. To be part of a franchise you may need to do it their way. These are part of their branding process which is great in a lot of ways but can be annoying if you do not want to have to comply.
Other issues could be that the franchise company does something that upsets customers, even if you had nothing to do with it you can be adversely affected by it because of their branding.
The Pros and Cons of Starting a Franchise
As with most business situations there are both pros and cons to having a franchise or just starting a business independently.
| Pros | Cons | |
| Risk | Starting a franchise can be less risky because of the established brand being in place. | |
| Costs | A franchise can cost more to start than a business started independently. | |
| Operations | There are limits to your independence because often a franchise has some strict procedures and rules, they expect you to follow as part of their network. | |
| Marketing | One of the best attributes of a franchise is their established branding and customer loyalty. | |
| Suppliers | Sometimes you have access to better prices because of bulk buying of the franchise. | Often in a franchise you have no choice in suppliers which means you can only use the ones they approve. |
After weighing the pros and cons you should have a better understanding of the best route for you to take to get your beauty supply store opening and running toward a successful business.
Other Factors that Will Determine Cost to Open a Beauty Supply Store
There are many factors to consider when setting up your business other than the ones previously mentioned that can have a large impact on your costs and your success as a business.
Location
Location not only helps predict probability of success for any business, but it will affect your startup costs. Traffic to your store is greatly affected by location. Without traffic your profits will be minimal.
A franchise store located in a highly visible, high-traffic area in the United States will average between $100,000 to $300,000 annually. However, a store in a bad location may struggle to keep the rent and utilities paid especially if it is a mom-and-pop store standing alone.
To own a location in a strip mall or other high traffic area on average can cost $245 to $294 a square foot for retail space. Cost will vary according to location, but you can expect to at least pay in this range if not more. To rent the same space could rent as low as $18 square foot in low traffic areas to as high as $48 square foot in prime areas with a Median price of $24 a square foot.
Size
The size of the storefront you need will depend on how much shelving space for the product you intend to have among other things.
Commercial buildings rent in all different sizes but if you rent a building with 2000 square feet with a median cost of $24 per square foot it is $48,000 divided by 12 months, so your rent monthly would be $4000.
Products or Stock to Sell
You will need to include money to purchase the stock to sell and to provide shelves and gondolas to place your product on. The costs of these will vary depending on your space and what products you want to carry.
It can vary depending on which wholesaler you purchase products from. Do you plan to carry high-end products or low-cost products?
Employee Cost
You will need to figure in how much it will cost to employ enough employees to cover the store adequately during store hours. You will need to remember to allow for employer-paid social security and tax cost when estimating how much you will need for employees.
Will you offer employees group insurance? If so, there will be costs involved for this too. What other benefits such as paid days off, sick leave and other related expenses do you need to add to your costs?
Will you pay minimum wage or higher? Currently, the minimum wage is $7.25 an hour. At work 40 hours per week it will cost, you $290. per employee.
Utility Costs and Other Expenses
You will most definitely need to figure in Insurance on your stock and other property in case there is a fire or something, Utilities will also need to be estimated to give you as close an idea to your costs as possible. Cleaning supplies, office supplies, security, and many other costs will need figured in your final estimate of costs to operate and open your beauty supply store.
To Conclude
It is easy to see why opening a beauty supply store costs could quickly escalate to as high as $500,000. You will need to consider all these things when doing your final cost analysis and then make a reasonable judgment whether you are better off buying a franchise or opening as an independent.
