How to Start a Beauty Salon in India?

Opening a Beauty Salon in India

Beauty salons, more popularly known as beauty parlours in India, are a dime a dozen. One can find at least a couple of them in every neighborhood, all competing for the patronage of local residents. While setting up and running a beauty salon may look simple enough, in reality, it is one of the most cutthroat businesses. Starting a salon business requires careful thought and planning and every detail must be chalked out to absolute clarity.

Plan Business Type and Services

Here are some of the factors you need to consider before you start a salon business:

• Target clientele – Lower-middle class, middle class, upper-middle class, upper-class and celebrities

• Type of salon – Beauty salon, hair spa, wellness centre, skin clinic etc.

• Expected daily footfall – This will determine the size of the space you need to rent.

• Location – Your salon’s location will play a huge part in determining its success. Choose one that has high visibility and is easily accessible

• Equipment– Salons have their own tools such as hairdryers, wash bowls, supply trolleys, styling trolleys, smocks, gloves, nail trimmers, facial bed, tanning bed, etc. which require a substantial initial investment

• Staff – The more sophisticated the beauty salon, the more important it is to hire educated and trained workers, who have ideally attended a beauty school. Do note that such staff will be more expensive than ordinary blue-collar workers

• Finance – Like any business, you need to determine how much initial investment outlay is required and identify the right source to raise funds

• Legal compliances – Since a beauty salon is a commercial enterprise, you will need to comply with a number of legal requirements such as registrations, licenses and so on.

Decide on Ownership Structure

One of the most popular ownership structures for a beauty salon is a sole proprietorship. This is because most beauty salons are small, family-owned businesses which cater to a particular area and generally do not have plans of expansion. A sole proprietorship business does not require any government registration. Let’s take a look at different models and suitable structures.

• Independent parlour

In an independent beauty parlour, a single entrepreneur or group of entrepreneurs operates a facility in a neighbourhood. What makes this a popular model is that it needs minimal investment and operational expenses. But such parlours are now facing stiff competition from big chains with better advertising capabilities. A Limited Liability Partnership (LLP) or a One Person Company (OPC) is the ideal structure for an independent parlour.

• Franchise

In this model, the salon operates as a franchise of a large chain. The franchisor offers support for setting up the establishment, operations, staff training, advertising, etc. However, this model needs a higher investment as compared to an independent establishment. Moreover, most franchisors will also demand a franchise fee based on the revenue of the salon.You may establish a franchise as an LLP or a private limited company to ensure that the franchise and franchisee right scan be transferred to another person or entity.

• Franchisor of a chain

If you are planning to establish a chain of salons, you will need significant capital, vendor partnerships, and branding. Because your brand would be the most valuable intangible asset, it is important to get trademark registration for the brand name

Necessary Registrations

These are the registrations which are mandatory for a beauty salon to run business:

• Ownership registration (LLP, Private Limited Company, Partnership, etc.)

•  MSME registration (if you want to avail the benefits of Startup India Scheme)

• Shops and Establishment License

• PAN registration

• GST registration

• Trade license from the Municipal Corporation

• Professional tax license

• Trademark registration to ensure that the brand name is protected and cannot be used by anyone else. This one is not mandatory, but is highly advisable

• Other licenses such as fire safety certificate, music license, etc. 

Apply for the requisite permits and licenses well in advance to avoid last-minute hassles. Come to LegalDocs for expert consultation on LLP, OPC, and other ownership structures for your salon.