Whether you’re dreaming about salon ownership for the first time, stepping into independence as a booth renter, or already running a beauty business and craving stronger systems, one truth remains the same:

Business knowledge is power — and in our industry, it’s the difference between surviving and truly thriving.

The beauty world is full of creativity, intuition, and skill, but the business side isn’t always taught, explained clearly, or presented in a way that feels approachable to hairstylists. That ends here.

This glossary was created to help you:
✨ understand the language of business without the overwhelm
✨ strengthen your confidence as an owner or aspiring owner
✨ make smarter financial and operational decisions
✨ build a business that grows with you, not against you
✨ increase profit, stability, and long-term freedom

Whether your goal is to open a salon, optimize the one you already have, build wealth through your craft, or simply become a more empowered stylist…

You’re in the right place. For even more industry resources, check out all the blogs on our friend SalonSpa Connection's website.
Every bit of business confidence you gain brings you closer to the future you’re building.

A

Assets (Salon Assets / Business Assets):

Everything your salon owns that has value — styling chairs, bowls, color, tools, decor, software, social media accounts, retail inventory, even your brand reputation.
Why it matters: Knowing your assets helps with budgeting, insurance, taxes, and building long-term business stability. For new owners, asset value can guide planning and upgrades.

Average Ticket (Average Service Revenue Per Client):

The average amount your clients spend per appointment.
Why it matters: Your average ticket helps you understand service demand, pricing strategy, and how profitable your time behind the chair really is.
How to use it: Track this number monthly — if it’s not rising, consider add-on treatments, packages, or adjusting your menu.

B

Booth Renter Agreement:

A written agreement outlining responsibilities between a salon owner and a booth renter. Covers rent, shared costs, cleaning expectations, hours, and boundaries.
Why it matters: It prevents confusion, protects relationships, and keeps the salon running smoothly.

Brand Identity:

The visual and emotional style of your business — colors, logo, vibe, client experience, and how you show up online.
How it supports growth: A clear brand identity helps attract your ideal clients and increase service pricing over time.

Break-Even Point

The point where your income covers all expenses — after that, you’re in profit.
Why it matters: Knowing your break-even lets you calculate how many clients or hours you need each week to stay financially healthy.

C

Cash Flow:

The movement of money in and out of your business.
Real-world example: When your bills are due before your busy weeks hit, that’s a cash flow issue.
Why it matters: Strong cash flow = no panic when rent is due, freedom to invest in education, and smoother slow seasons.

Client Retention (Return Rate / Rebooking Rate):

How many clients come back to you after their first visit.
Why it matters: This is the true measure of business success. A full book is built on retention—not followers.

Commission Structure:

The pay system for employee stylists — typically a percentage split between the salon and the stylist.
Why it matters: Knowing how commission works helps you understand earning potential and compare opportunities fairly.

Cost of Goods Sold (COGS / Product Cost):

The cost of everything used to perform services — color, backbar, foils, retail inventory.
Why it matters: High COGS can quietly kill profit. Tracking product usage helps you set accurate pricing.

D

Depreciation:

How equipment loses value over time — chairs, dryers, bowls, etc.
Why stylists should care: Depreciation affects taxes and budgeting for replacements every few years.

DTI (Debt-to-Income Ratio):

A percentage showing how much debt you have compared to income.
Why it matters: If you ever want to lease a salon space or apply for a business loan, lenders look at this number first.

Drive Time / Client Radius (Local SEO Term):

The distance clients are willing to travel to your salon.
Why it matters: Helps with choosing a salon location and optimizing Google searches for “salon near me.”

E

Employee Handbook:

A guide for salon employees outlining policies, expectations, procedures, and culture.
Why it matters: Protects everyone, simplifies communication, and creates a professional environment.

F

Fixed Expenses (Monthly Overhead):

Costs that stay the same every month — rent, insurance, software subscriptions, utilities.
Why it matters: Knowing your fixed expenses tells you exactly how much income you must bring in to stay profitable.

Forecasting (Revenue Forecasting):

Predicting future income based on trends, seasons, and booking history.
Useful for:

• planning education
• budgeting for slower seasons
• setting realistic goals
• deciding when to raise prices

G

Gross Revenue (Total Sales / Total Income):

All the money your business makes before expenses.
Why stylists must know this: A busy stylist with high gross revenue isn’t automatically profitable. Expenses matter.

Growth Strategy:

A plan for increasing income — through pricing, education, new services, hiring assistants, or adding chairs.
Why it matters: Without a growth strategy, stylists hit burnout or stagnation quickly.

I

Independent Contractor (Booth Renter / Self-Employed Stylist):

A stylist who runs their own business inside another business.
Why it matters: You are responsible for taxes, supplies, bookings, client retention, and pricing—not the salon owner.

Inventory Management:

Tracking product levels, retail, and color usage.
Why it matters: Prevents waste, supports profit, and ensures you never run out of core supplies mid-service.

K

KPIs (Key Performance Indicators):

The most important metrics for your business — rebooking rate, average ticket, new-client rate, utilization, retail percentage.
Why they matter: KPIs tell you exactly what to focus on for growth.

L

Lease Agreement:

A contract for renting salon space.

What stylists should know:

• length of lease
• Implications of default
• rent increases
• maintenance responsibilities
• Transferability
• subleasing rules
  Understanding your lease is crucial before signing anything.

Liability Insurance:

Coverage protecting you if an accident happens during services.

Why it's essential: It protects you, your clients, and your business from financial risk.

M

Markup (Retail Markup / Profit Margin):

How much you increase the price of retail above your cost.
Example: If you buy a product for $12 and sell it for $28, your markup creates profit.
Why it matters: Retail can significantly increase your income when priced correctly.

Merchant Fees:

The fees charged by card processors through platforms like Square, Vagaro, or GlossGenius.
Why to track them: These fees add up quickly and affect your actual profit.

N

Net Profit (True Take-Home Profit):

What you keep after all expenses—rent, color, taxes, software, supplies.
Why stylists should track it: You can be “booked out” but not profitable if your expenses are too high.

O

Operating Expenses (OpEx):

All costs required to run the business — rent, color, payroll, retail, education, taxes, marketing, utilities.
Why it matters: When you understand OpEx, you can price services accurately and avoid burnout pricing.

P

Policies & Procedures:

Your standards for cancellations, consultations, client experience, sanitation, and communication.
Why they matter: Clear policies protect your time, income, and professional boundaries.

Pricing Strategy:

How you determine what to charge for services.
Real-world method for new owners:

• Calculate product cost per service
• Calculate service time
• Decide on your ideal hourly rate
• Add overhead percentage (rent, software, etc.)
• Add profit margin
  Why it matters: Pricing based on emotion leads to burnout. Pricing based on numbers leads to sustainability.

R

Rebooking Rate:

The percentage of clients who schedule their next appointment before they leave.
Why it matters: High rebooking = consistent income and less reliance on new clients.

Retail Sales Ratio:

The percentage of your revenue that comes from retail sales.
Why it matters: Even a small increase can make a major difference in income and client results.

S

Salon Software (POS / Booking System):

Tools like Vagaro, GlossGenius, or Boulevard used for booking, payments, client notes, and tracking business data.
Why it matters: Salon software is the backbone of modern salon business management, not all platforms are created equal

Service Menu Optimization

Adjusting your service menu based on cost, time, demand, and skill level.
Why it matters: A strong menu increases profitability, reduces overwhelm, and attracts your ideal client.

SEO (Search Engine Optimization):

How you show up on Google when clients search “hair salon near me” or “blonding specialist.”
Why stylists should care: Local SEO brings in high-quality clients without paying for ads.

T

Target Market (Ideal Client):

The clients your business is designed for.
Why it matters: Knowing your target market helps with pricing, branding, marketing, and client retention.

Tax Deduction (Write-Offs):

Expenses that reduce your taxable income — supplies, education, tools, mileage, continuing ed, some rent.
Why booth renters and owners should care: Tracking deductions can save thousands per year.

U

Utilization Rate (Booked vs Available Time):

How much of your available time each week is actually booked.
Why it matters: Helps you understand if you need to:

• raise prices
• shift your schedule
• add services
• adjust marketing

W

Working Capital

The cash you need available to cover everyday expenses.
Why it matters: Helps you handle slow seasons, emergencies, or opportunities (like education or new equipment).