How to Open a Beauty Supply Store: Understanding Startup Costs

I’ve been asked this question a million times: “How much does it cost to open a beauty supply store?” It’s a valid inquiry, especially if you're considering launching your own venture in the beauty industry. However, this question doesn’t have a one-size-fits-all answer. The average cost to open a beauty supply store can vary significantly based on several factors, including location (city vs. suburb), store size (warehouse vs. beauty boutique), product mix (high-end vs. low-end), and much more.

Major Key (DJ Khaled voice): You need to have a clear vision of the type of beauty supply store you want to create!

Today, I’ll cover the main items you need to consider when starting a beauty supply store. The following are typically the highest costs involved and require careful planning:

My Top 3 Costs to Consider When Starting a Beauty Supply Store:

1. Build-Out Costs

Build-out costs encompass all expenses related to the structural completion of your store. This includes everything from flooring and lighting to custom shelving and labor. In most cases, build-out costs represent the highest expenditure when opening a beauty boutique. The determining factors for these costs include:

• A. Size of Your Store: The larger the store, the higher the customization costs. Contractors usually quote by square footage.

• B. Scope of Work: If you envision a minimalistic beauty boutique, you might only need to paint the walls. However, if you plan to enhance the customer experience with custom fixtures and built-in displays, costs will increase significantly.

If you intend to offer any services within your beauty supply store, such as a salon, expect additional costs for plumbing and electrical work.

2. Inventory Costs

Inventory costs are typically the second-highest expense, if not the first. Start by deciding on the product mix you want to carry. Consider the brands and product lines you wish to include. Store size will influence your inventory needs—larger stores will require more stock.

Calculating inventory costs can be challenging, as prices for inventory aren’t always readily available to new entrepreneurs. Fortunately, having a mentor can help you navigate these costs effectively.

3. Working Capital

Now, let’s talk about my favorite cost: working capital! Do you know why? Because 90% of entrepreneurs overlook its importance. Working capital is the money set aside to cover your overhead costs in the initial stages of your beauty supply store.

Having sufficient working capital is crucial because your store is new and may not generate enough revenue to cover all expenses while you build your customer base. The Small Business Administration (SBA) recommends having funds to cover your expenses for the first 6 to 12 months of operation. To determine your working capital needs, take your projected average monthly operating expenses and multiply that by six to come up with your working capital number.