Beauty Salon Financial Modeling: Step-by-Step Guide

A beauty salon is a business that can generate stable profits and provide satisfaction through creating a space for beauty and health. In today's world, both women and men strive to look good and regularly avail themselves of hair, face, and body care services. When opening a beauty salon from scratch, it's important to create offerings and services that are in demand by your target audience. The calculation of a beauty salon business plan will vary for different formats. Let's break down step-by-step how to estimate the number of clients and revenue, and learn to create a dynamic financial model in Excel / Google Sheets.
Opening a beauty salon is a business that can be launched with relatively small investments. However, to recoup the initial capital and achieve stable profits, it's essential to approach the creation of a beauty salon business plan thoughtfully. Commercial success, whether it's a hair salon, nail salon, barber shop, or waxing salon, depends on finding the right combination of location and service level for the chosen target audience. Choosing a location with good foot traffic is a necessary minimum requirement for launching a beauty salon. The location should be capable of providing you with potential clients to ensure full occupancy. The location will significantly influence the target audience, and more precisely, the chosen target audience will determine the optimal salon location.

The target audience of the beauty salon determines the range of services, selection of consumables and equipment, pricing, and interior design. Calculations will vary for a monosalon (such as a nail salon) and a beauty salon offering a wide range of beauty services, for a hair salon and a cosmetology studio requiring a medical license, for an economy-class salon, and a premium segment.

Typically, in addition to providing services, beauty salons also sell professional cosmetics and other beauty products. In this article, we will explore how to build a financial model for a beauty salon business plan, taking into account the specifics of each of these revenue streams.

Financial Model of a Beauty Salon for Business Plan

The financial model in a beauty salon business plan is a key tool that allows forecasting revenues, expenses, profitability, and investment needs. It provides the foundation for making strategic decisions, attracting investors, and ensuring sustainable financial success. The financial model helps in choosing the optimal business model and pricing for the beauty salon with a specific target audience and takes into account all the expenses for its opening and operation.

The basic financial model that we construct for any new business is the "3-Statements Model," which involves forecasting movements in three main financial statements: Profit and Loss (P&L), Cash Flow, and Balance Sheet.

You can find a financial model at this link, examples from which we will analyze in this article.

First and foremost, we start with calculating the profit and loss, beginning with forecasting revenue. The order of revenue formation is a key difference between different business models. Therefore, in this article, we will extensively examine the calculation of the dynamics of the number of clients and revenue from the two main revenue streams of the beauty salon - providing cosmetic services and selling professional cosmetics. We will break down the variables that contribute to the salon's revenue and the expenses we incur in the process.

Our beauty salon financial model template involves dividing calculations into several interconnected sheets in Google Sheets or Excel for ease of managing the model and evaluating different scenarios. We input all the initial data on the first sheet, based on which we calculate a detailed monthly model. Then, we compile summary financial reports (profit and loss, cash flow, balance) and draw conclusions, calculating the breakeven point, the amount of necessary investments, and visualizing key indicators on graphs.

Calculation of Revenue from Cosmetic Services in the Beauty Salon: Initial Data

Beauty salons are a traditional business where the number of clients is limited by production capacity. In this case, "production capacity" is determined by how many clients we can serve. This depends on the number of service stations, time required for service provision, number of staff members, and working hours.

Operating Hours

We immediately divide operating hours into weekdays and weekends since occupancy can vary significantly depending on the location and target audience. If you plan to open a beauty salon in a business district, the flow of clients on weekends will likely be minimal. However, if located in a residential area, clients may visit during the day on weekends and in the evenings after work on weekdays. Determine the optimal operating hours for weekdays and weekends and incorporate them into the model.

To calculate revenue from beauty services, it is necessary to determine the assortment and prices. For the purposes of the financial model, we group services into categories and assign average figures. With more detailed elaboration, it will be possible to further delineate categories and specify prices for each service.

We input into the tab with the initial data a list of service categories and average selling prices for each direction.
Start Dates

In practice, it may be feasible to launch services not all at once upon salon opening, but gradually. Performing renovations in all areas, installing equipment, hiring technicians—these all take time. However, instead of waiting for full readiness, services can be launched in stages. To account for the sales start schedule of different services, we indicate the launch date opposite each category.

Cost of Goods Sold

To determine the cost of goods sold for services, we calculate the cost of consumable materials required for each cosmetic procedure: hair dyes and shampoos, nail products, wax for epilation, etc.

Number of Clients

To understand how many clients your beauty salon can potentially accommodate, it is necessary to forecast the time required to serve one client. If you plan for a multifaceted salon offering various beauty services, the figures for each direction may differ. Don't forget about the time needed for cleaning and preparing the workspace between clients.

Next, we add the number of chairs (or workstations) for each direction. Suppose we have a sufficiently large space and we want several technicians to work simultaneously, at least for the most popular services.


For accurate revenue forecasting for each service category, it is necessary to consider that the beauty salon will not be fully occupied during all hours and days of operation. Additionally, occupancy may vary for different categories. Moreover, potential clients will need time to learn about the new location and become regular visitors. Therefore, for each service category, we assume the occupancy percentage at opening, monthly growth, and maximum occupancy we plan to achieve. Don't forget to differentiate between weekdays and weekends.

Calculation of Revenue from Cosmetic Services in the Beauty Salon: Forecast

We have input all the necessary data to calculate the revenue from cosmetic services in the beauty salon, and now we proceed to the forecast itself. Our goal is to create a dynamic model that allows for convenient calculations for different scenarios at the initial stage of the project. Therefore, we will create the monthly forecast on a separate tab, setting all the indicators here through formulas.

Determining the First Month

To determine the month from which various indicators should be calculated, we will use the IF function.

If the date value for the column is greater than or equal to the start date of the corresponding service, we will begin calculating the indicator using a formula; otherwise, the cell value will be "0".

In general, such a formula in Excel or Google Sheets looks like this:

=IF(E2 (month in the forecast) >= Projections! $E$13 (start date in the input data), formula, 0).

This approach allows the financial model to be more flexible when working with dates. If you shift the start dates, simply change the date in one month, and the entire model will be recalculated.

Calculating the Number of Weekdays and Weekends

Since our financial model takes into account the difference in the beauty salon's operation between weekdays and weekends, it is necessary to calculate the number of each type of day in each month for the calculations.

In Excel and Google Sheets, we can use the NETWORKDAYS function to calculate the number of working days in the month. To obtain the number of weekends, simply subtract this value from the total number of days in the month.

Calculating Occupancy and Number of Clients for Each Month

Based on the assumptions about the dynamics of the beauty salon's occupancy that we made in the input data, we calculate the occupancy for each month for each direction.

In the next section, we move on to calculating the number of clients. To do this, we multiply the maximum possible occupancy by the occupancy percentage for the specific month.

Forecasting Revenue

We multiply the number of clients by the average prices to obtain revenue. We perform all these calculations separately for each category of cosmetic services and then sum up the results for the total revenue amount.

Calculation of Revenue from the Sale of Cosmetics in the Beauty Salon: Initial Data

Moving on to an additional revenue stream - the sale of beauty and health products. This presents an excellent opportunity to increase revenue from each client without significant additional effort. The same brands from which you will purchase products for procedures will likely be willing to provide you with their range of products for end consumers for sale.

Assortment Matrix

We input into the tab with the initial data of our financial model the assortment of products that we will be selling. Similar to services, we categorize the products and provide average figures.

Cost and Prices

The cost for products will be the purchase prices at which the supplier supplies the products to you. To determine the retail price, we add a markup. However, in the case of professional brands, there is usually limited room for maneuver - these companies tend to dictate recommended retail prices.

Share in Sales

In the next column, we enter the estimated share in sales for each category. This will allow us to calculate the average bill.

Average Order Value

We proceed to calculate the average bill for the sale of cosmetics. We input into the model the estimated quantity of products that one client will purchase per visit. Then, based on the shares in sales that we have already indicated, we calculate the average order value.

Number of Clients

The number of cosmetics buyers directly depends on how many clients come to our beauty salon to use beauty services. After all, a beauty salon is not a store, and people are unlikely to visit just for shopping. Therefore, we set the number of product buyers as a percentage of salon visitors who have used services. Here, too, we assume that this share will increase - the assortment will expand, and technicians will improve their sales skills. Thus, we input into the model the share of visitors making purchases for the launch month, the growth dynamics, and the maximum share.

Calculation of Revenue from the Cosmetics Sales in the Beauty Salon: Forecast

To forecast revenue from the cosmetics sales by month, we use the same algorithm as for calculations related to cosmetic services. We determine the start month, calculate the share of customers from the total visitor flow, and through a couple more arithmetic operations, obtain the number of clients and revenue.

Costs for Opening and Operating a Beauty Salon

Revenue is not yet profit. To understand the potential profit of such a business and the costs associated with opening a beauty salon, we move on to calculations and forecasts of the expense side.

In this part, the calculations are simpler than when calculating revenue. However, we will go through all the expense categories of the beauty salon to ensure nothing is overlooked.

Capital Expenditures

Let's start with the expenses for opening the beauty salon. After finding a location and negotiating rental terms, you'll need to transform the space into a cozy and functional beauty salon. Prepare an estimate for renovations, purchasing equipment, furniture, tools, and other necessary items, and input it into the input data tab of the financial model. Don't forget about depreciation periods; this is important for subsequent forecasts in the profit and loss statement, cash flow, and balance sheet.

Cost of Goods Sold

We've already input the initial data for calculating the cost of goods sold when planning the assortment and prices. In addition to expenses for purchasing goods and materials, we include costs for payment processing. We set this as a percentage of revenue.


It's more convenient to allocate the labor cost fund to a separate tab. List all the employees necessary for the operation of the beauty salon, taking into account the need for full-time and part-time staff. Plan for annual salary increases and don't forget about taxes and fees. Additionally, you can specify the dates for hiring additional staff according to the forecasted growth in salon occupancy.

Operating Expenses

Next, we move on to the operating expenses of the beauty salon. Here, we need to consider expenses without which the operation of the beauty salon cannot be sustained. These include utilities and costs for maintaining the premises - rent, cleaning, equipment maintenance.

Location plays a key role in attracting clients to the beauty salon, but marketing campaigns will significantly increase the flow. Allocate a budget for various promotion channels and don't forget about additional expenses such as design, copywriting, and printing of promotional materials.

And finally, administrative expenses, without which the operation of a legal entity is impossible - accounting, legal services, insurance, and so on. This section will also include rental expenses for the premises.

Now you have a tool that allows you to estimate how much it will cost to open your dream beauty salon and how much profit this business can bring. Choose benchmarks that will be realistic for your case, taking into account the results of marketing research (for the financial model, it is important to consider competitor analysis, market size estimation, and surveys of potential customers), and play with the figures in the input data to achieve the optimal financial result. For convenience, you can add graphs and additional metrics.

More information about other aspects of financial models can be found in my other articles on the blog.

You can purchase a template of the beauty salon financial model in Google Sheets or Excel with all the formulas via the link. You'll just need to input the data for your case, and the model will be generated automatically.

You can purchase a financial model template for a specific business in the store or request the development of a custom financial model for your project.