Business Article - Beauty Salons - A Buying Guide
Beauty salons are a vital part of our society as they will always be in demand, and this is not selectively applying to women. Even men, once thought to prefer barber shops, are today frequently visiting unisex salons. From Hollywood to small towns, a beauty salon will receive business, and if the salon provides excellent service, the chance of a returning customer is high, making this type of business is a profitable one if managed well. And with beauty schools continually filled with applicants and prospering students and professions graduating frequently, the field is never short of people qualified to work in this business.
There are typically four situations surrounding buying a salon. One is opening a franchise, such as SuperCuts or Fantastic Sam’s . Here, you are paying for a name and standard people know and will typically support based on the familiarity of the name. Another bonus is the ability to be able to charge a cheaper price than competitors because of the subsidized support from the franchise. Situation two is buying an already credited salon from someone. This is a chance not available at all times, but they do happen more frequently than potential owners realize; some reasons this occurs include the owner becoming tired of running the business, the owner is retiring, or the owner is filing for bankruptcy. These can be seen as a lucky chance meeting: a potential owner and a current owner are looking to trade at the same time. A third option is opening a new salon. This takes hard work and supplying money for many items, mainly the building and any starting costs that may arise. Taking this route also requires advertising, as the business has not been heard of, and appropriate talent, namely the stylists and beauticians, must be found, evaluated, and hired. Recently, the fourth option is fast becoming a regular occurrence in the salon business: the salon owner acts as a landlord and acquires the monthly rent from the stylists working in the salon. This happens when the stylist rents their area (or booth) as they would a furnished apartment. The rent includes use of the facilities, chair, shampooing area, and other used and new furniture; and the stylist, in turn, supplies their own styling products, perm chemicals, hair blowers, etc., and they have their own key and are responsible for their schedule and list of clientele. This takes some of the responsibility off the owner, as the stylists generally are self-governed.
As there are different ways of owning a salon, there are different ways to pay stylists. Generally, the most typical situation shows that the stylist is paid either by an hourly wage, a salary, a commission, or sometimes by a combination of all three. Usually in these cases the owner is also a stylist working at the salon. However, a stylist recently graduated from a cosmetology school tends to prefer starting on a salary or hourly rate, since they will generally not be able to generate a high income by commission alone when first starting out. These are seen as the more traditional payment options, however, as stated in the previous paragraph, more and more salon owners are opting for booth rental methods. It is important to again note in this case that the owner and stylist are no longer peer employees; rather, the owner is now a landlord and the stylist is now in charge of their own share of the salon firm. This method is currently being debated in the salon business by stylists and owners alike; what can not be debated is that it is quickly becoming a regular occurrence. Researching and talking to other owners and stylists is the surest way to find the best choice for each potential and current salon owner.
Any business fails when it cannot sell its product, thus every salon needs a healthy, vital list of clientele to keep it running and make profits for both the owner and stylists. If an owner creates a new salon, a new list of customers must be found and built. This can be done through different ways: if an owner is also an employee and responsible for all the stylists, advertising is an important tool that could mean the success of the business. However, if the owner is the landlord of the salon firm, as mentioned earlier, then advertising may not be enough for individual stylists. Since they are responsible for their own commission and well-being, stylists may travel and hand out business cards and try to build a loyal clientele. In either case, it is generally true that if a customer is satisfied upon the first visit, then there will generally be a second one as opposed to that customer going elsewhere. Salon customers tend to frequent the same stylist. This is for obvious reasons, as the stylist has worked with the client before and knows important insider information on how to please the customer, since they have done so before. This pattern works well for both the owner and the stylist, thus it is extremely important to sell or hire stylists who are well-rounded in all areas of cosmetology as well as have friendly and personable attitudes and communication skills. While a stylist’s job is not to be a psychologist, as everyone knows who has watched a movie based around a salon, it is a social atmosphere: a client may feel the stylist was cold and uncaring if they do not try and associate with the customer during their visit. Choose a stylist as if one were looking for a secretary, as the stylist will be one of the first (and hopefully not last) impressions of the salon.
Whether one is considering buying a salon or taking over an existing one, there are certain guidelines one should consider. One of the first steps in this process is to appraise how much a beauty salon business is worth. This is done, of course, by looking at how much income a salon typically makes in a year, not forgetting to estimate how much it has changed from past records and the earning potential for the future. Also, doing research and studying the market for other similar businesses can give invaluable information about how to price a business. While this is useful, one must also take into consideration of how much revenue and business a salon has: a salon with a higher clientele and current profitable income is worth more than a comparable business with lower sales. Concerning the cost and value of a pre-existing business, take into consideration the stylists currently working at the salon. Some may be well known, have a large clientele, and give the salon and owner a good name and high profits. Other stylist may include newly-graduated students who have yet the ability to make a good profit based on commission. A question arises: if the salon is bought, will all new stylists be hired? Or will some be kept and some newly hired? Another thing to consider is the clientele and stylist relationship. Any time a change is made to a pre-existing business a risk is incurred, however, this risk may increase the profit margin at the salon. Another question is how many competing salons there are in the area and how well and how much they charge.
When running a beauty salon, certain licenses need to be obtained; of course, always check with the local town or city hall to determine that the salon is within the regulations of the area, but most businesses need a town and state permit. Sometimes a business needs to acquire a DBA, or “Doing Business As,” received from a state office. This is needed if the business operates under any name other than its legal name, defined under the name filed on business articles and files. Often, the legal name is the same as the owner’s name. Also, most clients and salon owners prefer beauticians and hair stylists to have taken classes or have accreditation from a cosmetology school. Usually, these certificates or diplomas hang in the stylist’s vicinity and a client is comforted by its presence, the same as in a doctor’s office. If the stylists are skilled, courteous, creative, and have the ability to satisfy the client, then an owner and the business will succeed.
Again, as in any aspect of owning a salon, research is essential, but research and awareness must also be met with the action of risk taking. After all, owning a salon fits into the bracket of owning a business, and this assumes one has a sense of entrepreneurship and the ability to take action with risks involved. Whether a potential salon owner buys an existing salon or creates one, whether they pay the stylist by salary or commission, or whether the owner is an employee themself or a landlord, having these choices are what make owning a salon a profitable, creative, and fun business to manage.