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Starting a Beauty Salon/Barber Shop/Esthetics/Tanning

Last Verified: 2005-07-11

TABLE OF CONTENTS

The following is intended to provide an understanding of potential license, permit or registration requirements when considering the establishment of a beauty salon in Canada. This document was prepared by Canada Business and contains a series of possible steps and issues to consider in carrying out your project. The extent to which the information will apply to you will depend on the circumstances related to your situation.

For further information on individual topics identified herein, contact your local Canada Business service centre. Because this document is only meant as a guide, the Canada Business service centres will not accept responsibility for business decisions made based on the information provided.

A customized document on starting a beauty salon is available for the following provinces:

Provincial/territorial government, municipal and non-government information may be included, depending on the subject and the region.

BASICS TO GETTING STARTED

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Before proceeding, reference should be made to the Business Start-up Info-Guide for your region which offers information on the steps involved in establishing a new business.

Starting a business can be a rewarding undertaking, but it comes with its challenges. Before starting a business in Canada, it is wise to do your research. You should also make sure you are suited for entrepreneurship, and understand that significant effort may be required. As such, you should thoroughly enjoy the field you are getting into, and you must believe in your product or service as it may consume much of your time, especially during the start-up phase. There are many issues to consider such as regulations, financing, taxation, managing your business, advertising, and much more. For more information, see the Checklists for Going Into Business.

The following is additional information to consider.

INDUSTRY OVERVIEW

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General Information
Business is booming in the personal services industry, according to the latest survey of establishments that provide services such as haircuts and facials.1

Personal care providers, which include hair and esthetics salons, spas and the like, accounted for about 42% of the industry’s total earnings. These establishments earned about $3.3 billion in 2002, up from $2.9 billion in 2001 and $2.6 billion in 2000.2

Types of Services
The Canadian version of the North American Industry Classification System (NAICS) is a system developed jointly by the United States, Canada, and Mexico to provide new comparability in statistics about business activity across North America. The businesses addressed in this guide are classified under the Personal Care Services. Among the sub-groups of these services are:

  • Barber Shops (812114): This Canadian category includes establishments primarily engaged in providing hair care services to men, including hair cutting and styling, and the trimming or shaving of beards and moustaches.3
  • Beauty Salons (812115): This Canadian category includes establishments primarily engaged in providing hair care services to women, providing esthetic services such as manicures and pedicures, or a combination of these services.4
  • Unisex Hair Salons (812116): This Canadian category includes establishments primarily engaged in cutting and styling men's or women's hair. Establishments that combine hair care services for men or women with esthetic services are also included.5
  • Other Personal Care Services (812190): This category includes establishments, not classified to any other industry, primarily engaged in providing personal care services.  6 Colour consultants, estheticians and tanning salons are part of this sub-group.

In establishing a beauty salon, the range of services to offer may vary. You can choose to cut hair only, or may choose to include other services like nail care and skin care (facials and make-up, hair removal). Some even offer suntanning, sell some products or have a spa in their beauty salon. The steps for opening a beauty salon are the same for one service as they are for many services.

Types of Operation
Before opening your business, you will also have to decide which type of operation you would like. You may choose to operate your business under a franchise or as a non-franchise. Personal service businesses can be operated in a public place, in a private home or as an on-site service.

If you choose a franchise, you have to follow directives from the parent company and go with the options they offer, i.e. types of services, types of products, etc.

  • Franchise
    As a potential business owner, you may be considering buying an existing or opening a new franchised business. As a franchisee (see Checklists for Franchisees), you enjoy the benefits of "Goodwill" that the name and reputation of the franchise already possesses. You also have, in many cases, the support of the parent company in issues such as location selection, management training, free advertising and support during the start-up phase of your operation. Also you have the advantage of capitalizing on an already profitable concept. However, as a franchisee, you must pay the franchisor for the benefits provided, and these costs come off the top of your sales revenue and may add up to more than 10%. Also your freedom is somewhat restricted when you own a franchise. You must adhere to the standards set by the franchise.
  • Public Place (e.g., salon or spa)
    A commercial establishment offering a product or service. The benefits of owning such an establishment may include a wider scope of advertising, the possibility of offering numerous specialized services at one location, the sharing of overhead and advertising costs.
  • Home-Based Business
    A business operated out of your home may be an approach to try out an idea at as minimal cost as possible to see how the idea develops. There are still steps to take and regulations to follow; a list of pros and cons should be written down and considered for each situation.
  • On-site (or mobile)
    Some stylists, whether they work with make-up, hair, nails or other personal services, may enjoy the on-site environment of working at such places as photo studios, old-age homes/hospitals, theatres, TV or film sets, modeling runways or home parties.

Choosing Your Location
Choosing the right location for your business is important. Considerations include the needs of your business, where your customers and competitors are, and such things as taxes, zoning restrictions, noise and the environment. For most businesses, an appropriate location is critical.

Selecting Your Inventory
Although you are mainly providing services, clients may wish to buy some specialized products on site. Your product mix depends on your target market's needs.

For example, you may specialize in up-dos and want to carry a variety of hair styling tools and accessories; you may choose to carry professional hairstyling products; if you have tanning beds, you may want to sell a variety of specialized hydrating, protective and accelerating creams.

Layout and Design
Before ordering or installing equipment, design your salon's layout (beautydesign.com has a free electronic Salon Planner design tool).

Some tips:

  • keep the design simple to keep costs down
  • consider the level of comfort for both yourself and the client
  • keep in mind the accessibility of the most frequently used tools and products
  • position products with the highest profit margins at eye-level

Selecting Suppliers
Service merchandisers sell items such as beauty aids, accessories and magazines. They may also deliver, stock shelves, price items and help estimate demand.

For more information, see the documents Selecting Your Supplier and Profit by Your Wholesaler's Services.

Questions

Do you enjoy working with people and enhancing their image?

Can you stand on your feet for up to 11 hours per day?

Do you enjoy keeping up with fashion trends and new ideas?

Are you able to work with chemicals such as shampoos, dyes, nail lacquer?

Do you mind working evenings or weekends?

Are you good at visualizing hairstyles compatible with people’s physical feature?

Do you pay attention to detail?

LICENSES, PERMITS AND REGULATIONS

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One area of rules and regulations that all new businesses must comply with is that of licenses, permits and regulations. When creating a business, the entrepreneur must contact the municipality involved, along with the provincial/territorial and federal governments.

Each municipal government has the authority to issue its own business licenses within its jurisdiction. Since there is no uniformity throughout the country regarding municipal licenses for businesses, you should consult with the appropriate local officials to determine whether your business will be affected by local regulations and licensing requirements. Businesses (including home-based businesses) must also meet the zoning by-laws that control property uses in their municipalities.

Examples of licenses, permits and regulations that could apply to you when starting your beauty, aesthetics or tanning salon, or barber shop, may include, but are not limited to:

Licenses

Permits

  • vendor permit
  • building permit

Regulations

You can get permit, license and regulation information by contacting your province/territory, local city hall, town or village office or rural municipal office. Contacts for local, provincial/territorial and federal governments can be found in the government listings of your telephone directory or on the Provincial/Territorial Web site.

BizPaL

BizPaL - Business Permits & Licences provides Canadian businesses with one-stop access to permit and licence information from all levels of government. This online service is offered by Industry Canada in partnership with provincial, territorial, and municipal governments.

MANAGING YOUR OPERATION

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Insurance
Insurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, it could be a wise decision to ask other business owners in your area to recommend one.

The following is intended to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with an insurance agent. Adequate insurance coverage, particularly in the area of liability is a must.

Basic insurance

  • fire insurance (extended coverage on buildings and contents);
  • liability insurance (depending on type of business);
  • burglary protection (theft coverage);
  • dishonesty insurance (covers thefts by employees).

Marketing/Advertising
The establishment of customer loyalty is an important key to success. Word-of-mouth advertising and good public relations are often the best ways of promoting a small business. Depending on your market and its size, consider flyers, newspapers (especially for holiday promotions), radio, TV and the business pages of the telephone book. Networking, including an open-house day, is also a good way to promote your salon; bear in mind that a satisfied customer is good advertising.

Advertising on the Internet is also highly recommended. If you cannot afford your own Web site, there are companies, who, for a fee, may host a Web page for you. Shop around to make sure you find one that attracts a lot of traffic; this will maximize your exposure. No matter how you choose to market your business, it is wise to track how your client found or heard of your salon - this may help determine your future advertising strategies.

For more information regarding advertising and marketing, see the following documents:

The  Online Small Business Workshop  covers the basics from developing your customer profile to promoting your business.

The Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada. The Act defines which marketing practices are illegal and the process of complaint investigation.

For more information, consult the document Competition Act - Misleading Advertising and Deceptive Marketing Practices, administered by Industry Canada or visit the Competition Bureau Web site.

Market Research
Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your customers and competitors is a critical first step in market investigation and development of a marketing plan. A tool that can help you determine how you measure up to the competition is  Performance Plus , an interactive on-line financial performance tool from Industry Canada. (See the document  Guide to Market Research and Analysis.)

In developing a marketing plan, your primary functions are to understand the needs and desires of your customers, to select or develop a product or service that will meet your customers' needs, to develop promotional material that will inform customers and then you must ensure profitable product or service delivery.

Basic Bookkeeping
A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis. The legal requirements concerning financial records are that they must be a permanent, accurate and complete record of your daily income and expenses. There are many types of record books and bookkeeping systems available, for example:

  • double entry bookkeeping;
  • commercial bookkeeping systems;
  • one-write systems;
  • computerized systems;
  • single entry bookkeeping.

Note: All staff working with cash should be trained to recognize counterfeit currency (see the document Security Features for Canadian Bank Notes).

Employees' Compensation
Following are four types of compensation plans generally used in your field:

  • chair renting: the owner rents a chair to a worker and the latter is paid directly by the clientele;
  • straight salary: the worker is employed by the owner at a specific salary;
  • straight commission: the worker receives a percentage of the incoming revenue for customers done; and
  • combination of salary and commission: the worker receives a minimum salary plus a commission when the incoming revenue on customers done reaches a specific level.

Historically, these workers were paying a fixed amount to the owner for the rental of a chair. After 1985, though, a trend toward regular employee status, with payment on a salary plus commission basis, had begun.

Selecting Professional Services
The use of professional services is essential to the success of a small business. Professionals can provide knowledge and expertise in the areas where you may have little. They can round out your management team to ensure your business is operating efficiently. There are five main areas of professional services with which you may consult:

  • lawyer (contact a lawyer about legal issues);
  • insurance broker;
  • accountant;
  • specialists in services such as manicures, facials, electrolysis;
  • banker (for tips and pointers on dealing with your bank, see the document  Dealing With Your Banker & Other Lenders)

Furnishings and Equipment
There will be certain furnishings and equipment needed in your place of business list those items and their cost. An important factor to consider, when choosing equipment, is the after-sales service and repair, and their affordability but other than buying new you may think of buying used or even leasing your furnishings and equipment.

  • Used Equipment - Consider buying used equipment as a cost-saving measure. Sources of used equipment could be a salon that is closing or dealers in second-hand equipment. The drawback to this approach is that, often, there are no guarantees with the purchase.
  • Leasing Equipment - Another alternative is to lease equipment to help keep start-up costs down. 

Setting the Right Price
Setting the right price can influence what consumers will buy, which in turn affects the total revenue and the profit. In the end, the right price for a product or service is the price that a consumer is willing to pay for it. Hence, decisions regarding the correct product or service pricing are a key to successful management.

Checklist for Profit Watching
Making a profit is the most important -- some might say the only -- objective of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits you must raise revenues, lower expenses, or both. To make improvements, you must know what is really going on financially at all times.

Staff Training
Some of your staff might need to register with a provincial and territorial Apprenticeship Program . This means, that after completion of specific training, the employee will need to acquire a number of hours of "on-the-job experience" before getting a certification.

Apprenticeship programs are generally administered by provincial and territorial departments responsible for education, labour and training (under the direction of the provincial or territorial Director of Apprenticeship) with authority delegated from the legislation in each province and territory.7

Staff may need to acquire a "Red Seal". A "Red Seal" allows qualified tradespersons to practice the trade in any province or territory in Canada where the trade is designated without having to write further examinations."8

Besides attending schools and professional training courses, much can be learned through on-the-job training and by attending conferences. Staff training can be provided through seminars, styling contests or trade shows. It might also help to maintain a library of resource materials such as magazines on latest trends or products, and health research for tanning salons.

Offer training for your staff in:

  • first aid
  • injury prevention
  • sales techniques

ASSOCIATIONS

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In addition to national associations, provincial or territorial associations are also available to beauty salon owners. Although it might not be necessary to join an association, there can be advantages in becoming a member because they:

  • promote and exchange marketing and promotional ideas among members;
  • establish and encourage high standards of quality and professionalism;
  • represent and advocate on behalf of members.

The following associations might also be helpful:

  • Allied Beauty Association
    The Association is a not-for-profit Canadian organization that represents more than 90% of the Canadian professional beauty supply industry with respect to hair and nails. It is a trade association of manufacturers and distributors of professional beauty products and equipment for the use of beauty salons and spas.
  • Canadian Cosmetic, Toiletry and Fragrance Association
    The Association is the leading Canadian trade association for the personal care products industry. One of the Association's primary goals is to establish and maintain an optimum business environment that promotes Canadian industry's global competitiveness through freedom from unnecessary regulation.
  • Esthétique SPA International
    The largest and most prominent esthetics and spa events organizer in Canada regarding the following specialties: aesthetics, electrolysis, body care, hydrotherapy, balneotherapy, thalassotherapy, pressotherapy, massage therapy, lymphatic drainage, phytotherapy, aromatherapy, make-up, pedicure, manicure, and nail technique.
  • International Spa Association
    The International SPA Association is a worldwide community of spa professionals, product manufacturers and service providers.
  • Leading Spas of Canada ( Spa Canada )
    A national organization working together through member services, professional development, education and marketing to The Leading Spas of Canada as an international Spa Destination.
  • Joint Canadian Tanning Association
    A joint association of many provinces:
    • Ontario Tanning Association -- Harry Jones (905) 434-8168;
    • Certified Suntanning Association of Manitoba -- Steven Gilroy (204) 953-8267;
    • Quebec, Denise Tremblay, Francine McKenna, DTremblay@infobronzage.com;
    • Western Canada, Frank Ingham (604) 482-3230.

RESOURCES

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Resources that may help beauty salon owners include, but are not limited to, some publications and Web sites:

Publications
 Guidelines for Tanning Salons Owners, Operators and Users
This guide is designed to give tanning salon owners, operators and users of tanning equipment a fundamental understanding of ultraviolet radiation and its effects on people.

You may find books, magazines and other relevant print material at any Canada Business service centre and/or business service organizations in your community that provide Canada Business information. Contact the Canada Business service centre in your region for the location nearest you.

Web sites
Some interesting Web sites:

ADDITIONAL INFORMATION

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When seeking business information, feel free to visit the Web sites for the Business Start-Up Assistant . You may also want to check with your local library, the major chartered banks, your local Chamber of Commerce, educational institutions and business development organizations -- some of which offer courses, seminars and workshops.

BIBLIOGRAPHY

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  • The Daily, Statistics Canada, on-line (Ottawa: March 30, 2004)
  • North American Industry Classification System (NAICS), Canadian Version, Statistics Canada, on-line (Ottawa: June 23, 2005)
  • Interprovincial Standards "Red Seal" Program, Human Resources and Skills Development Canada, on-line (Ottawa: October 2, 2004)
  • Performance Plus, Industry Canada, on-line (Ottawa: April 8, 2005)
  • beautynet.com (Toronto)
  • StyleCareer.com (Mountain House, California: 2003-2005)
  • National Occupational Classification, on-line, Human Resources Development Canada (Ottawa: 2001)
  • Spas Development and Management Training, Resource Center, on-line (Ontario: 2003-2005)
  • Accent on Feet, Media List, on-line (Toronto)
  • The First Stop Shop, on-line (Belfast, United Kingdom)
  • Competition Bureau, on-line, Industry Canada (Ottawa: June 10, 2005)

1. The Daily, Statistics Canada, on-line (Ottawa: March 30, 2004)
2. The Daily, Statistics Canada, on-line (Ottawa: March 30, 2004)
3. North American Industry Classification System (NAICS), Canadian Version, Statistics Canada, on-line (Ottawa: June 23, 2005)
4. North American Industry Classification System (NAICS), Canadian Version, Statistics Canada, on-line (Ottawa: June 23, 2005)
5. North American Industry Classification System (NAICS), Canadian Version, Statistics Canada, on-line (Ottawa: June 23, 2005)
6. North American Industry Classification System (NAICS), Canadian Version, Statistics Canada, on-line (Ottawa: June 23, 2005)
7. Interprovincial Standards "Red Seal" Program, Human Resources and Skills Development Canada, on-line (Ottawa: October 2, 2004)
8. Interprovincial Standards "Red Seal" Program, Human Resources and Skills Development Canada (Ottawa: October 2, 2004)
*To download publications in PDF format, Adobe Reader is required (available free of charge).

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.



Last Modified: 2006-06-22

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