Effective Salon Business Model

If you are looking to open a salon with the least amount of risk and highest chance of success.  Booth rentals are key.  One of the ways we found to keep renters longer is to offer commissions on product sales.  To do this it’s important to stock and educated products that people can sell.  Make it easy to sell the product and offer a tiered payout.  Typical work week is 5 days a week.  If your renters could sell one product a day that would translate into 20 sales per month.  Typical rental rates run about $200 per week.  If you offered a bonus for selling 25 products per months to the renters they could push your products and in exchange give them half price rate for the month.  This does two things it makes it easier for them to pay rent.  It increases your product sales even paying out a huge commission.  If you have 20 renters that sell $25 products each even if your profit is only $20 per item after commissions at the end of the month that is an extra $10,000 in profit.  Best of all you make sure to also collect rents.  If you have 20 stations all rented for the month that is $16,000 month in revenue.  Do the math can you make a net profit after expenses with $26,000 in revenue. If rents and over head cost you $6,000 per month that’s 20k month or almost a quarter million per year.  This should fit into a 2,000 square foot salon.  Average national rent would be about $4,000.  Add in utilities, taxes, accounting ect and it’s possible to keep expenses at about $6,000 month. 20 renters isn’t such an impossible number if you have the right location. Of course other types of operations such as Medical Spas have larger upside but there is a lot more risk and overhead.

Tips For Opening A Successful Salon

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Hair salons and day spa businesses tend to be immune to fluctuations in the economy. One reason this holds true in this business is because the business is built around a clientele that returns frequently. It is important to make sure that customers become repeat clients if you want your business to thrive. When you consider any of our tips be sure to think of them in terms of how it will help turning clients into repeat customers. Our advice would be to prioritize these tips in ranking order in how they will help build repeat business.

The day spa industry has typically been immune to economic factors. In the year 2005, there was an average increase of 11% in the revenue in the salon industry dating back to 2002. Success in opening up a hair salon or day spa is not impossible. This type of business offers a wide range of services that people always look for. In addition, the things that people do avail in salons and spas are those that cannot be simply done at home. In addition, paying for a salon service seems to be less expensive than allocating money for things that are more pricy like new cars and appliances.
Surveys about the income that may be earned from salon businesses showed that salon owners do on average earn a nice profit from their business and if these owners are excessively industrious and hardworking, it’s not impossible earn six figures.

For people who are thinking of opening up a hair salon or day spa, they can opt to try three options. They may choose to franchise a known salon, buy an established salon or open a new one from scratch. Aside from this, some may suggest booth rental where a salon is owned by person who acts as some kind of landlord to other stylist who rent spaces or booths on the salon. Typically the most profitable business model is to have employees working on commission including the opportunity to earn bonuses by selling products. This type of business model while being more profitable does have a much higher failure rate.

FACTORS TO BE CONSIDERED WHEN OPENING UP A SALON

But before opening up a salon, a prospective owner must consider several factors. Neglecting to check on these aspects of the salon business may prove fatal to the business in hand.

OPERATING HOURS

The first one is the operating hours. An owner must have a clear idea of how long the salon will be open to the customers. Nowadays, most salons are open throughout the week. During special occasions, extended operations hours may be considered. Such types of schedules are pre-empted by the business of the people during the weekdays that’s why the time for relaxation and pampering themselves are commonly achieved during the weekends. Aside from taking note of the work hours of the people, salon owners must consider the possibility of setting up appointments and adjusting operating hours for some clients.

PRICE RANGE

The next factor to be considered is the price range for the services offered by the salon. The prices must be properly appropriated in that they may not seem too high or too cheap. A very high price may limit the number of customers who will avail them while a very cheap service may not generate enough profit for the business. It is advised to survey the status quo of the people living within the area where the salon is located to gauge the people’s capability in availing salon services. In addition, the costs needed for the equipment and supplies, as well as the staff and personnel’s salary must be taken into account when computing for the prices of the services that will be offered. Taxes and other additional expenses should also be anticipated and thus, money must be constantly in reserve. Lastly, for setting up the prices of the services rendered in a salon, the overall profit should amount to a number that can not only cover the expenses and emergency financial problems but also the salaries not only of the employees but also of the owner.

SERVICES OFFERED

Various types of salon offer a wide range of services. When opening one, the services that will be offered should highly be considered. For hair salons, these services may include hair styling, hair coloring, hair and scalp treatments, perms, hair straightening/curling and a lot more. In some, nail services may also be offered ranging from manicure, pedicure, nail tipping, nail treatments and hand and foot massage.

For spa services, additional services has elongated the list that the older ones can offer. These services are generally classified as skin and body care, hair removal and makeup. Skin and body care services comprise various body beautifying practices such as facial and body exfoliation, massage, hydrotherapy treatments, and tanning services. Hair removal services focuses on various parts of the body like the face, legs, arms back and underarms while makeup services may enlist application of cosmetics, eyelash and eyebrow modification and ear piercing.

In deciding the services that will be offered in hair salon or day spa, the cost that these services will entail should be considered. The owner must weigh if the income that will be generated by these offers can greatly contribute to the total earnings of the business. Also think about if the equipment that is required for the services. Rooms or spaces must be adequately provided for these services to avoid encountering problems with regards to their implementation.

HIRING THE RIGHT PEOPLE

A salon owner cannot do all the work in his business. Maintenance and doing the services is one thing while managing the business and doing administrative duties is another. As such, the owner must hire the right people to do the varying task that come when running a salon business. Hire professional stylists and cosmetologist for example, for services that require the skills of such kind of people. For administrative duties, hire someone with enough experience or if a newbie, has all the qualities that can be found in a good manager. Accountants should be consulted for financial issues like income taxes and expenses while consultants apt for marketing the business must also be kept in mind.

MARKETING STRATEGIES

In order for a salon to be successful, proper marketing strategies must be generated and put into action. Some of the most common promotional strategies for salons are offering discounts, holding special events, and conjuring up catchy jingles or tag lines that may pique the interest of the old as well as potential customers.

Before doing or employing any marketing strategy, the economic status of the population must be surveyed. The owner must see if the people are able to avail the services that will be offered by his business. When this issue is settled, the owner can now focus on how he or she can properly promote his or her business to people.

Technology will play a very crucial role in promoting a business. It is best to create a website for the salon. Such website should contain pertinent information that the customers will find useful. It should also be quite interactive to let customers do something on the website like setting up appointments, posting commentaries and making inquiries.

When making a website for the business, the appearance must be something that must be appealing to the eyes of prospective customers. Eye-catching pictures and images of what the customers can attain when they go to the salon must be included in the website. It will be also totally helpful if brief and clear descriptions are provided for the services offered as well as their prices. The website must also be constantly updated for the benefit of the customers.

LOCATION OF THE SALON

Where the salon will be erected is a very important factor that must be given thorough consideration. The area where the salon will be built should be covered with enough light and safe. It must also be accessible to a lot of people and can easily catch attention. Moreover, it would be very good if there are other shops in the surrounding area to attract potential customers that also frequent these shops.

Hair salons and day spas can be situated in places like shopping malls, buildings and the like. In most cases, they can found as stand-alone properties outside and nearby malls because renting spaced inside malls can be quite expensive for some salon owners.

In choosing a location, there should be enough space to accommodate the customers and the different areas for the services that will be offers. Consulting a professional with regards to the layout of the building can provide insight on how the salon must be built. Ventilators and equipment must be properly installed and water pipelines and electrical lines must be working properly.

RESOURCES

The most important resource when opening a salon is having enough cash on hand for the business to build. Resources must include those things that can give the prospective salon owner precise and accurate information regarding the industry that he or she will be venturing into. Nowadays, almost everything can be found on the internet so it will not be very hard to acquire information that are related to establishing a salon business. But aside from the internet, the right people must be considered and their opinions heeded if those sound sensible and may seem to help in properly achieving the desired business potential hair salon and day spa owners want.

With the things mentioned above, it can be concluded that starting a business is not easy even though condition seem favorable. Establishing a hair salon and day spa is no exception. Careful planning must be done and a lot of time must be allotted in preparation for such undertaking. The person planning to build a salon must at all times consider asking for help and the opinion of other people. Thorough research must also be conducted to gain adequate knowledge about the nature of the business and to accumulate pertinent details that are important to start the business. And lastly, it must be kept in mind that even though hair salons and day spas had been relatively successful despite the downfall of the economy, the success of any kind of business still lies in the proper way of managing and running it.

We also like to look at the mental aspects of the stress and strain of starting a business.  Take a look at self help books and tools to keep a balanced mental wellness.

Beauty Industry

Growth in the beauty industry has been fuels over the last year by cosmetics and skin care.  Lotions and Bath Oils have proven to have seen accelerated growth.  One standout is Lush which focuses on the idea to go green and give back with products like sea salts or bath bombs.  Things like body treatments, bubble bath, hair care and facial care have shown huge growth.  High quality and organic lines have particularly shown growth and increased consumer demand over the last year.

All most 20% of salons have gone to the booth renting business model.  Retail sales drive profits.  The average retail ticket this year is just under $20 per transaction. Retail sales average from 20% to 30% in the more successful salons.    Client visits dropped from an average of 4 times a year last year to 3 times this year. A salon must be in the 15% to 20% average to be profitable.  Check out Salon Today for more industry data.

Booth Rentals Vs Commission Employees

For entrepreneurs who wish to open their own salon some suffer the dilemma of choosing between hiring full-time employees and just renting a booth. Most often, people who opt to rent a booth have no inkling of the situation they are getting into. This results in confusion and most often than not, business owners find themselves in chaos as they realize the problems that come with a renting a booth for business. The concept of renting booths in a salon is a good way to start a new operation because the renters bring with them their own clientel and it establishes a great initial cash flow.

For those who are new to the concept of booth renting, they must take note of the advantages and disadvantages of availing such things for their business. Some people may vouch for booth rental while some may be against the very idea. Nevertheless, the opinions of these people vary and most are based on personal experiences and thus, people must take care in heeding these opinions as something much more different can happen to them if they choose to rent a booth for their business.

When renting a booth, the pros and cons vary according to the points of view of the owner or the stylist and other personnel. If the a salon proprietor chooses to rent a booth, some of the advantages that may come with it are not having the responsibility of providing compensation and insurance for the employees and look for grand ways to promote the business. If the one renting a booth is a contractual stylist, he or she has the freedom of setting the schedule to service the customers. The stylist can also use whatever styling products he or she prefers and all the money earned is his or hers alone.

On the other hand, renting a booth does not always promise positive outcomes for the renter. For a renter who hires other staff for his services, there is the risk of losing them to other businesses that offer a more stable job. Longer working hours cannot also be avoided if the business owner needs to reach a certain quota for his income. The chance to provide an improved quality in the services provided is also missed as staff and personnel do not have additional trainings. Legally, financial issues involving the income and taxes may catch the attention of certain authorities if there no supporting documents to back up the statements of the renter.

For a stylist who rents a booth, the negative side of renting booth comes in the form of having to compete with the more established salons. And if he or she wants to fight off these competitions, training and education for additional skills may be quite expensive. The rental fee also proves to be a burden especially when there are not a lot of customers. Also, the stylist needs to handle all the work from managing the money, buying supplies, and making business decisions.

With the things mentioned above, one may be enlightened regarding the benefits and burdens of renting a booth in accommodating a salon services business. But if filled with doubt, the business owner can still opt to establish a fully owned salon complete with the necessary staff, equipment and supplies. But like booth rental, it has its sets of upsides and downsides.

For the positive aspects, a salon owner has the freewill to do his own bidding in every aspect of his business. He can improve the quality of the services his salon provides if he chooses to let his employees gain addition skills training. And with proper strategy and planning, the limit on the amount of money coming in is infinite. In the case of the employees like the stylists, the promise of having a long-term job is there. The stylists can also build long and lasting relationship not only with their co-workers but with the customers as well. Health benefits and tax payment are shouldered by the business owner and each person employed is assigned with a specific such that one does not need to do a job that he or she has little knowledge of.

For an aspiring stylist, doubts may come in considering renting a booth. The stylist may feel some hesitance especially if he or she is not confident that renting a booth can prove to be profitable for his profession. In this type of situation, the stylist may opt to undertake a commission-based job.

In a commission-based type of job, the stylist will work in a salon. He or she will be given a schedule dictating the days and time regarding the work for the salon. Like any regular employee on other types of businesses, a stylist working on commission-based job gets to be paid with a certain salary but aside from that, there will be a commission based on the standards set by the salon owner for his or her services. Aside from this, the stylist can also get professional help from the other personnel working in the salon. He or she does need to carry alone the burdens that come with the nature of his or her work. Stylists on commission-based jobs can also receive free and additional skills training from their employers.

Taking a commission-based job can be a good opportunity for stylists who are looking for a steady income, but for those who aspire to build their own career and someday have a salon of their own, this type of job can pose some risks.

In conclusion, venturing into any profession does not come easy. When starting a business or renting a booth as a stylist, a person must be professional and ensure that employed or not, bound by a contract or a freelance for providing services, problems in any chosen profession cannot be avoided. Success in any chosen career path still depends on perseverance, patience and the ability to cope up with problems and come up with solutions to solve them.