The indoor tanning industry in the United States is constantly growing. According to IBIS, it reached an estimated value of $1.8 billion in 2022. With further growth projected for the future, now is an excellent time to get involved and start your tanning salon.
Successfully launching a tanning salon requires many steps. Finding an ideal location, purchasing quality tanning beds and equipment, hiring trained staff, and establishing operating procedures are all essential.
This guide will help you learn how to open a tanning salon. From choosing a business structure to navigating legal compliance, we walk you through key steps for bringing your own indoor tanning business plans to fruition.
1. Conduct Tanning Salon Market Research
Market research is essential to working in the tanning salon industry. It offers insight into other local tanning salon businesses, where to source the best tanning booths, how to structure your tanning salon business plan, and more.
Some details learned through market research for spray tanning booths include:
- The average tanning salon customer visits 24 times per year spending around $21 per visit for sessions ranging from 5-20 minutes.
- Success relies heavily on neighborhood marketing and building customer loyalty in a small geographic area due to the nature of repeat visits required.
- Demand across the country remains fairly equal in terms of market penetration and number of locations per capita.
- While population plays a role, quality of service, relationships with customers, and effective marketing ultimately determine the performance of any given salon.
- Start-up costs range widely from $50,000 to over $500,000 depending primarily on real estate selection and equipment choices.
- Leasing an existing tanning salon can significantly reduce the initial investment, however profit margins may suffer from less efficient older equipment.
- Purchasing brand-new beds offers the best return on investment over time through lower operating costs and higher client capacity per square foot.
Thorough market research will vastly simplify starting a tanning salon of your own. Use the data you collect to better know competitors and your target market, and build your business plan.
2. Analyze the Competition
Thoroughly scoping out the competition is crucial when assessing the viability of opening a new tanning salon in any given market. We recommend an in-depth analysis of competitive facilities within a minimum 5-mile radius.
Some ways to better understand competitors as you build your own tanning salon include:
- Drive by each location and go inside as a mystery shopper to evaluate factors like décor, cleanliness, layout, staff friendliness, and pricing packages.
- Take notes on strengths and weaknesses compared to your envisioned positioning.
- Pay attention to customer volumes during various days and times to gauge popularity and typical capacity levels.
- Search online review platforms like Yelp and Google to supplement your direct observations with customer commentary about local providers.
- Sort reviews by recency and volume to analyze market leaders. Look for common complaints that your salon could improve upon.
- Check competitor website optimization with tools like SEO Site Checkup for domains you may contend with for search rankings.
- Evaluate their site content, keyword targeting, backlinks, and domain authority.
- Search industry forums to uncover insider perspectives on major chains and distributors.
- You can glean details on equipment performance, maintenance issues, training programs, and pricing to make more informed investment decisions for your new salon.
Ongoing monitoring of review sites, search engine rankings, and local business listings will be imperative after opening your doors as well. This enables staying atop customer satisfaction issues and maintaining visibility as the market evolves.
It’s also worth noting that some tanning salons offer multiple services; not just tanning. For instance, they could offer simple eyelash and nail services if you’re in a rush and want it done in one place.
3. Costs to Start a Tanning Salon Business
When launching a new tanning salon, initial investments typically range from $50,000 to over $500,000 depending on real estate, construction needs, equipment selections, and projected capacity. We will outline realistic cost considerations in the mid-range for establishing a profitable operation.
Start-Up Costs
Salon Lease or Purchase: For a space sized from 2,000-3,000 square feet to accommodate about 10 tanning beds, monthly retail, storage, and common areas, plan on a lease cost of $4,000-$6,000 monthly or a purchase price between $350,000-$500,000 for mortgage financing.
Salon Build-out and Design: With an existing retail space, minimal structural renovations should fall around $40,000-$60,000 including all permitting, contractor fees, lighting, flooring, electrical, walls, plumbing for bathrooms/showers, HVAC, and architectural finishing details.
Tanning Equipment and Beds: Outfitting 10 premium stand-up booths with new equipment will likely run $120,000 to $150,000. Reputable equipment companies often offer financing programs with roughly 20% down and payments structured over 5 years with the life expectancy of bulbs and acrylics needing periodic replacement anyway.
Furnishings and Interior Décor: From the front desk, waiting area, change room benches, artwork, towels, and all the small décor elements, allocate $15,000-$20,000 to tie the aesthetic theme together into an upscale, welcoming oasis.
Inventory: An initial purchase of tanning lotions, accelerators, moisturizers, and protective eyewear will probably total close to $3,000-$4,000 to effectively merchandise retail displays.
Operating Capital: We recommend reserving an additional 3 months of operating expenses, approximately $30,000, to cover payroll, product orders, utilities, debt payments, and other fixed overhead through initial ramp-up before member dues consistently exceed outflows.
Total Start-Up Costs: $262,000 – $310,000
Ongoing Costs
Commercial Mortgage or Rent Payments: For purchased property, factor principal and interest of around $4,500 monthly on a 20-year SBA-backed loan. Leasing remains a fixed $4,000-$6,000 depending on market rates.
Equipment Lease Payments: Yearly costs of $30,000 are broken down into $2,500 monthly for tanning bed financing programs.
Staffing Expenses: With a team of 5 employees paid $15 per hour including the manager, plan on approximately $45,000 in quarterly payroll plus another $10,000 annually for related taxes and workers’ compensation insurance.
Utilities: Electric, gas, water, trash removal, and phone/internet bills should total about $750 weekly or $3,000 monthly.
Insurance Premiums: General liability along with bed-specific coverage runs $350 per bed annually, so roughly $3,500 per month for 10 units. Umbrella policies add another $500 monthly for adequate protection.
Advertising: An advertising budget between $1,500-$3,000 monthly enables consistent digital promotions, search campaigns, and retention programs to maintain awareness and membership.
Product Inventory: Average 25% restocking with retail lotions, eyewear, and ancillary items totals around $2,000 per month.
Facility Maintenance: Around $500 monthly covers cleaning supplies, contracted services, preventative maintenance on air systems and equipment, and general upkeep.
With sundries and miscellaneous overhead accounted for, prospective owners can expect almost $100,000 in total fixed monthly operating expenses, not including the cost of goods sold. This underscores the imperative of selling memberships and keeping utilization high through customer loyalty programs.
4. Form a Legal Business Entity
When establishing a tanning salon, the legal structure you choose determines taxation, liability protection, and options for growth. We will compare the pros and cons of each for this industry.
Sole Proprietorship
A sole proprietorship provides no separation between personal and business assets. The owner is personally responsible for all debts, lawsuits, or claims. Any losses directly lower the owner’s net worth. Income flows through to the owner’s tax return based on revenue minus deductions.
Sole proprietors must also manage all aspects of the operation personally. This works for self-employed consultants but has severe limitations when hiring employees or bringing on partners.
General Partnership
By sharing ownership with a partner, you can combine more startup capital and management expertise. However, each partner is personally liable for the actions of the other. This presents tremendous financial risk and often strains personal relationships through disputes over controlling interests.
Limited Liability Company (LLC)
For small business owners, LLCs provide the best liability protection by separating personal and company assets. They limit legal exposure in the case of accidents, lawsuits, or claims solely to the capital invested in the business.
Rather than business losses hitting your personal bank account, your liability cannot exceed initial and ongoing investments into the tanning salon LLC. You also gain credibility for financing with an official registered business entity. For taxation, LLC income passes through to members’ returns like partnerships but with flexible distribution ratios not tied strictly to ownership percentage.
Corporation
Establishing a standalone C-corp or S-corp shifts the business into a formal legal entity offering complete separation between company and owner finances. This protects personal assets from any business-related risks.
The process requires more extensive record-keeping and reporting to stockholders. Corporations also face existence requirements, double taxation on profits, and less flexibility for dividing fiscal responsibilities.
5. Register Your Business For Taxes
An Employer Identification Number (EIN) serves as a unique tax ID for establishing your tanning salon as a registered business entity. The number functions similarly to a Social Security Number (SSN) in enabling your company to open business bank accounts, apply for licenses, file tax returns, and hire employees.
While sole proprietors can use their SSN instead, obtaining an EIN better separates personal and business finances. This also avoids risks associated with sharing your SSN extensively.
Applying for an EIN is free through the IRS website. The streamlined process only takes a few minutes. Follow these steps:
- Visit the EIN Assistant page on IRS.gov
- Answer preliminary questions about your business type and structure
- Verify your entity doesn’t already have an EIN
- Select the “View Additional Types, Including Tax-Exempt and Governmental Organizations” option
- Choose “Sole Proprietorship” or your applicable legal business structure
- Provide basic contact details and responsible party information
- Receive your instantly issued EIN
This unique 9-digit number then becomes tied to your business for filing taxes and opening commercial accounts.
You should also register with your state revenue department to legally collect and remit sales tax in your region. Search “[state name] sales tax ID” to begin this process required for selling retail products. Costs vary by state but often range between $10-$100 for processing.
With an EIN and sales permit established, you can fully operate your tanning salon as a legitimate small business.
6. Setup Your Accounting
Proper financial record-keeping is imperative for a successful tanning salon. Detailed tracking of sales, payroll, inventory orders, member accounts, and expenses streamlines crucial business decisions while fulfilling IRS reporting obligations.
Accounting Software
We highly recommend using small business accounting software like QuickBooks to automatically sync transactions from bank and credit card accounts into organized financial reports. This eliminates manual entry and reconciles accounts for accurate real-time visibility of profitability. Expect costs around $20-50 monthly.
Hire an Accountant
Supplementing with an accountant provides experienced guidance in applying regulations around payroll taxes, sales tax collection, income categorization, and taking applicable business deductions. Typical duties range from monthly reconciliation to compiling all documentation for annual income tax prep. Expect fees from $100 monthly or $700+ annually depending on the level of involvement.
Open a Business Bank Account and Credit Card
Separating personal and professional finances is an important part of running your own tanning salon. It helps maintain organization and accountability whether spending or earning. Opt for cards offering signup bonuses along with cash-back rewards. Issuers determine credit limits according to annual revenue and time in business. Expect ceilings around $10,000 for new salon ventures.
7. Obtain Licenses and Permits
Before opening doors to the public, indoor tanning salon owners must proactively file for all necessary business permits and regulatory approvals within their state, county, and city. Find federal license information through the U.S. Small Business Administration. The SBA also offers a local search tool for state and city requirements.
Nearly all states require specific tanning facility licensing through respective health divisions and agencies that oversee the usage of UV radiation equipment. Applications include listing all tanning beds along with serial numbers and providing detailed floorplans denoting installed locations.
Most cities and towns mandate obtaining general business licenses applying local codes for zoning compliance and intended use fitting neighborhood parameters. For tanning salons, some areas restrict proximity to schools, churches, parks, or residential blocks.
Standard business insurance policies exclude tanning exposure, so specialty supplemental coverage is required by law. This protects owners in the event of injury, fire damage, or equipment malfunctions. It also covers employee incidents and client claims like skin burns or eye damage alleged to result from improper bed usage.
Salon staff assisting customers and operating tanning equipment may require formal training to earn state-administered radiological technician certificates. Some jurisdictions issue mandatory testing after certain hourly experience thresholds working under supervision. Renewals may mandate continuing education credits.
Tanning units fall under regulation by the Food and Drug Administration including random audits to confirm model numbers match branded registrations on file. Beds typically ship with proper IDs but double-check all serials before customer use.
For aspiring salon owners, allot 60-90 days to fully process all of the above licenses, permits insurance policies, equipment registrations, and technician applications to avoid any compliance oversights or delays once build-outs are complete. Consider consulting an industry lawyer or specialized permit expediter to navigate state-specific requirements.
8. Get Business Insurance
Given the health risks associated with UV exposure, adequate insurance is imperative for financially protecting a tanning salon owner. Policies cover expenses from accidental injury claims, property damage, and legal judgments that could otherwise cripple or bankrupt an uninsured small business.
Without coverage, just one disgruntled customer alleging health issues from overexposure could potentially sue for hundreds of thousands in medical bills. Even if unfounded, legal fees alone could lead to insolvency. A serious fire or flood event could also destroy all equipment and force permanent closure.
Another scenario involves a client slipping on a wet floor and breaking an arm. That person may pursue legal action requiring two years of lost wages and surgery payments. Just one injury lawsuit could top $100,000 without a settlement cap from an insurer.
Additionally, an electrical surge or HVAC failure could damage all tanning beds, costing $150,000+ to replace. Lacking contingency funds or coverage for replacements could again force the doors to close.
The good news is that tailored policies offer protection in all of the above catastrophic scenarios. Expect costs of around $350 per tanning bed annually.
Follow these steps to obtain the necessary coverage:
- Research insurers specializing in tanning salon policies like Insureon and Kinsale Insurance.
- Provide details on your planned bed models, floorspace, location, and client capacity targets.
- Select desired liability limits, property damage caps, legal defense parameters, etc.
- Add any optional coverage like cyber security, employment practices, etc.
- Obtain multiple quotes for comparison.
- Choose the best-priced plan fitting your risk tolerance.
With the right insurance partner, tanning salon owners can rest easier knowing the business remains financially shielded from a wide range of catastrophic loss events.
9. Create an Office Space
While tanning salons center around delivering services onsite, having some private administrative workspace proves beneficial for daily accounting needs, sensitive client conversations, and strategic planning. We cover suitable arrangements by location and cost.
Home Office
Converting a spare bedroom into a basic home office typically runs less than $1,000 to add a desk, computer, phone, filing cabinet, and basic supplies—a cost-effective option for solopreneurs. However, attempting to manage all salon operations remotely introduces distractions and prevents onsite visibility.
Coworking Space
Nearby WeWork locations offer convenient hourly access to professional office infrastructure for $25-$100 monthly depending on membership level. This facilitates periodic accounting work or vendor meetings without needing dedicated space. Phone booths also enable private calls.
Salon Retail Office
Sectioning off 100-200 square feet in a storage room or back area of the tanning salon itself costs little beyond a desk and computer hardware. This accessibility enables directly handling member questions, reconciling cash drawers, placing inventory orders, or reviewing staff schedules in real-time while remaining on premises.
10. Source Your Equipment
Opening a tanning salon requires outfitting the space with specialized beds, stand-up booths, facial units, and integrated locking systems. The multitude of equipment needed makes owning a tanning salon somewhat more difficult than a, for instance, body scrub and lip scrub business and is one of the most equipment-dependent businesses out there. We outline top options for procuring essential gear via new purchases, used deals, rentals, or lease financing.
Buying New
Major tanning equipment manufacturers like Sun Dash, Sunvision, and Australian Gold sell directly to salon owners through authorized distributors found via sites like Tan for Less. Expect the latest LED bed models with premium performance for roughly $10,000-$15,000 each. Order extras to avoid wait lists as replacement parts often take months due to overseas manufacturing delays.
Buying Used
Purchasing refurbished or lightly used tanning beds from other salons and upgrading equipment cuts costs by 40-60%. The most robust secondary inventories list on sites with individual sellers also advertising via Craigslist and Facebook Marketplace. Just confirm the remaining bulb, ballast, and acrylic lifespans through technician inspection before purchasing as replacements negate any savings.
Renting
Some salon owners opt to initially rent 10-20 beds to accommodate variable customer demand before committing to buying their fleet. National rental companies like ULTA Tanning offer flexible 12-month leasing terms of around $250 per month per bed including delivery, installation, and maintenance.
11. Establish Your Brand Assets
Implementing professional branding uniquely positions a tanning salon to attract loyal clientele in competitive markets crowded with national franchises and generic mom-and-pop shops. Memorable logos, slogans, signage, ads, and dedicated storefront websites translate into instant recognition and trust for return visits.
Getting a Business Phone Number
Acquiring a unique local phone number with extensions for departments and salon managers conveys legitimacy over relying solely on personal mobiles. Cloud-based systems like RingCentral offer the flexibility to text or call staff internally, place calls on hold, record welcome greetings, and enable call forwarding to any device. Expect starter plans from $30 monthly.
Creating a Logo and Brand Assets
A custom logo encapsulates the vibe and offerings of your ideal tanning lounge through symbolic shapes and dominant colors. Scalable vector files allow the reproduction of neon external signage, employee shirts, marketing materials, social pages, and dedicated websites. Budget $200-500 to engage a designer on sites like Looka for creation plus a branding guide.
Business Cards and Signage
Once the logo is finalized, order 5,000 dual-sided cards from Vistaprint for $40 to distribute anywhere networking opportunities arise. Also, acquire interior vinyl banners and external store signage featuring the logo for street visibility.
Purchasing a Domain Name
Secure matching .com domain for branding continuity across touchpoints using registrars like Namecheap for under $20 annually.
Building a Website
Given online prominence for discovery, claim domain early to develop an information-packed website. Utilize Wix drag-and-drop tools for straightforward DIY build-outs or hire a Fiverr freelancer starting around $300. Focus pages around location details, membership plans, amenity listings, hours, contact forms, etc. This hub drives calls and walk-ins.
12. Join Associations and Groups
Expanding professional connections with industry peers helps tanning salon owners trade insights around effective marketing tactics, equipment best practices, the newest spray solution formulas, and general business growth strategies.
Local Associations
Joining regional chapters of the American Suntanning Association provides visibility to suppliers, distributors, and other localized salons for you to meet at regular gatherings. Expect minor annual membership fees of around $100-200 to access this insider network.
Local Meetups
General small business groups within cities often host relevant development workshops on topics like social media ads, customer retention, hiring best practices, etc. Use Meetup.com to find chapters holding events within driving distance. This also enables chatting with other solo entrepreneurs for peer mentorship.
Facebook Groups
For on-demand advice from thousands of industry participants across the world, search Facebook groups for targeted communities like:
- Tanning beds/ Anything Tanning Related Sale Site In GA
- Tanning Bed Repair
- Self Tanning- Tips/discussions/ask the Expert!
These forums have endless discussions around best practices that any member can learn from. Owners often poll peers here for quick feedback when facing challenges with hiring, marketing campaigns, lease terms, zoning issues, etc. Participate actively.
13. How to Market a Tanning Salon Business
Implementing consistent marketing enables continuously attracting new clients while retaining existing members to maximize repeat visits and referrals. This brand-building fuels sustainable salon growth.
Personal Networking and Referral Marketing
First and foremost, provide exceptional service and amenities so current patrons rave about experiences to friends. Satisfying customers who then endorse your business remains the most valuable marketing channel. Offer referral rewards like bonus sessions or retail credits to incentivize peer promotions.
Digital Marketing
- Run Google/Facebook ads promoting membership specials focused on tight geographic radii around your location for hyperlocal visibility
- Create an Instagram profile showcasing salon aesthetics and community happenings to build lifestyle appeal
- Start a YouTube channel publishing weekly vlogs, product tutorials, or showcasing upcoming seasonal swag
- Distribute e-newsletters and SMS text messages alerting subscribers of new equipment arrivals and monthly specials
- Update social pages, Google Business listing, and website tagging emerging trending keywords like “mystic spray tan” or “collagen bed therapy”
Traditional Marketing
While digital channels enable better targeting and metrics, don’t rule out complementary traditional methods for blanketing entire neighborhoods.
- Print flyers and mailers spotlighting grand opening promotions or holiday sales for mass distribution
- Place radio spots on local stations ahead of notable tanning seasons tied to summer vacation plans or spring break getaways
- Invest in visible area billboards showcasing prices and proximity on daily commuter routes
- Arrange for in-person sponsor booths at community events like city festivals and university sporting events
- Donate baskets to silent auction fundraisers for both charity goodwill and inclusion in program handouts
The most effective customer acquisition balances reinforcing brand familiarity across both online and real-world channels where ideal target segments spend time. Allow 6-12 months to sufficiently saturate the market through repetition before assessing the return on investments.
14. Focus on the Customer
Delivering white-glove customer service keeps clients returning while earning referrals in a recurring revenue business fueled by loyalty. Given low barriers to switching salons, fulfillment of high hospitality expectations provides the ultimate competitive edge.
Consider a first-time visitor contemplating a costly unlimited monthly membership of around $60. If greeted warmly and guided thoroughly through proper tanning bed usage, they’re more likely to return.
Conversely, a lackluster experience with flippant staff rushing patrons in and out without personal care risks soiling your brand as someone shares frustrations about the poor hospitality. Even established members will second guess renewing if taken for granted without ongoing rapport.
Tanning salon clients invest significant money for access to premium services they cannot administer themselves at home. Each session purchased represents trust in your expertise for proper UV exposure, skincare protection, and achieving desired results over alternatives. Validate that confidence through consistent five-star treatment.
Given repeat business reliance, customer retention merits just as much attention as new customer acquisition when plotting growth. Dynamic hospitality catalyzes both.