Writing a Business Plan for your Salon Business.

Why should you write a business plan for your salon? Its place where you can get everything in your head organized. As a booth renter or a salon owner we have many hats we have to wear and getting all your ideas in one place helps you focus. Your business plan doesn’t need to be an elaborate document something as simple as a bulleted list for each category is enough. If you are applying for a loan or funding they will want to see a more formally drafted document. 

Your business plan is also something that should grown with your business. I like to review mine ever 2 to 3 years just to make sure I’m getting everything I can out of my business. As hairstylist we are adaptive beings so it goes with out say that our businesses will mold and adapt to us and the people involved. Below I have out lined the key categories for our industry. If you want to take a more in-depth class on writing a business plan, The Small Business Administration has a free online class you can take on their website. www.SBA.gov

Helpful tip: Your don’t have to do these categories in order. I took notebook paper and wrote a category at the top of each page, then brain dumped everything I had for each category. Then opened a fresh document and organized my thoughts.

Here we go! 

Executive Summary (recommend that your write this last) 

Section one: The Business

    • What we do

    • Location

    • Product and services

    • The Market

    • Marketing Plan

    • Competition

    • Management

    • Personnel

    • Production Capabilities

    • Summary- Literally a summary of what is described above. 

Section Two: Financials

    • Sources and Applications of Funding

    • Capital Equipment List

    • Balance Sheet 

    • Break Even Analysis

    • Projected Income Statement

    • Cash Flow Projection- Where your money comes in and goes out.

    • Deviation Analysis

    • Historical Financial Information

    • Summary-Take the summary of section 1&2 and use it to write the executive summary above, which is why it is recommended to be written last. 

Appendix: A list of the attached documents, with descriptions, like pay stubs and worksheets that you used to track your numbers and any other formal documents and research to support your points and decisions. 

Exit Strategies: What are you going to do about the business if you decide to leave?

Have more beauty business related questions? Want help with your marketing plan or specific category? Contact us for a free 30 minute call at info@BlackVioletConsulting.com 

Lots of (hair) love,

Lesley D. Flanagan

How to decide if Booth or suite rental is right for you? 

A lot of hair stylists leap without thinking into booth rental. Sometimes it works out because they had good instincts and sometimes it fails because they didn’t have a plan and a vision in place.

Booth renting can be the best thing that ever happened to you or the worst. You have the ability to be in control of everything you but you also have the responsibility in having to DO everything. There are questions you should ask yourself before leaping into renting a chair in any facility.

How many clients do you service in a week? or a month?

Generally, in order to make a profit in booth rental you need to have at least 400 clients. Meaning you have to be seeing at a minimum 30-60 clients a month. Depending on how much you charge and how many days you work this can vary but it’s a good number to keep at the front of your mind. Also remember all your clients might not follow you or this is a good time to evaluate who you really want to follow you. You need to be aware of this and have a plan in place in order to fill those gaps.

What is your client retention rate? 

The current national average is 45%. Yuck! If you are in tune to who your targeting and providing quality service its easy to get your percentage up.A well trained and educated service provider is usually in the 80-90% for retention rates. No one is perfect so very rarely do people hit the 100%, mostly due to people moving away and lifestyle changes. If you have a low retention rate you need to figure out where the problem is and I recommend you do that while you work underneath someone else. They will have the resources to give you and the education and skills training you may need.

What is your monthly gross income?

This is an important number but  keep in mind 60% of that number the salon owner is keeping but very little of it is their profit. The salon owner is paying for your payroll taxes, supplies, marketing and also like mentioned above your education. There are overhead costs that you might not realize until you are out in the world alone and trying to do everything and then getting frustrated because you aren’t making ALL the money like you thought the owner did. Once you are out and renting a chair and evaluating your service totals and how much of that is profits, in some cases it evens up still being a 40% commission but you are doing all the work. Its cool if you want that you just need to be real with yourself about it.  

How much money are you generating in tips on a monthly basis?

You should be logging and keeping track of tips, especially if you ever want to buy a house. You can get approved for a bigger home loan if you can verify how much you made in tips.

What is the average cost of hair products you use monthly? 

Separated by categories, this will give you an idea of what your expenses will be like. Don’t forget small items like foils and gloves, these things add up quickly. Create a spreadsheet an log to the best you can what you used for a month, this will come in hand to create a budget.

What are your personal expenses?

Like I mention above, there is a possibility that not all of your clients will find you, unless you are really good at planning and telling them (more on planning this in a post to come). Because of this your income might take a hit until you build back up. You need to make sure you can float yourself in the meantime or you’ll get frustrated or you will put undue street on your family and significant other.

How much can you afford and how much are you willing to pay for booth?

This is sometimes determined by the market value in your area or the area you are looking at renting. Do your research and make sure it's in your budget. The nicer the salon the higher the rent usually. The monthly or weekly rent is usually determined the same way we value homes or apartment. So if the salon owners rent and overhead for the space is high she is going to then divide that by the amount of chairs in her space. Again, it depends on the area you are looking at.

Will you need any assistant? 

If you book on the half hour, you will need help. Otherwise you need to account for 15 minutes after ever client in order to cash them out rebook and sell them retail. This is where having any assistant can come in handy. You can also look for a booth rental salon that provides a receptionist, again that costs money to the owner so she is going to add that to the rent. Either way if you think about it it will cost you money. It just ends up being what you prefer. I like to make sure my schedule isn’t too tight. I want to have opportunities in my schedule for add-ons or up-selling.

Does your income allow for an assistant? If you hire an assistant you also have to look at what the minimum wage is in your state and you will have to pay their employment taxes. Figure out what your state requires before you get someone's hopes up and then find out you can’t afford them. Remember, you have to spend money to make money and if you have an assistant you will have an opportunity to run a second column. Meaning you can double and triple book clients because your assistant can help with the workload. (Spoiler Alert! I have a whole post coming about assistants and assistant programs.)

How much will an individual medical plan cost you or do you have someone who’s insurance you can be added to?

Some states require you to have your own health insurance and if you don’t you will have to pay a fee at tax time. I am lucky enough that the company my husband works for has a great plan and I’m on his plan. If that's not the case for you, I highly recommend contacting someone in order to get info on what you would need to pay for out of pocket medical insurance.  As a booth renter in the eyes of the state and the federal government you will be considered self-employed therefore you have to provide your own medical insurance.

Who will handle your record keeping or what software will you use?

With the latest advancements in technology it can actually be quite affordable to keep track of your own books. You still need to have and accountant in order to file but you can use services like Quickbooks Self-employed to manage and keep track of expenses. Also look into online booking software to help manage your schedule and send reminder texts to clients.

If your Salon Landlord does not provide towels and capes how will you handle that?

The first salon I rented at didn’t provide towels or capes and there was no laundry facility on site. So I would have to look at my book and make sure I had enough for the day and then go home at night and wash dry and fold for the next day. Some salon owners in the booth rental model work behind the chair as well and they don’t want to be bringing home laundry at night so they do provide laundry facilitates. Again that depends on the where you rent. Make sure to ask this question when you meet with the owner, if you decide to booth rent. They don’t have to provide it, its an amenity.

What is your marketing plan for obtaining new clients?

Social media has made it so easy to market and promote yourself online. Never in our history has it been so easy to get out in front of clients and build a business. You still need a marketing strategy and you need to know who you are targeting. Even if you have a full book you need to have some sort of a marketing plan and a constant flow of new clients in order to sustain your business. Things happen in life and you don’t want to wake up one day and realize you have no clients. If you don’t have a marketing plan or a social media marketing plan, you will slowly bleed out.

How much will liability insurance cost you?

This is based on what your owner requires for coverage and the amount of money you make. As a self-employed business owner you need to have liability insurance. If your salon burns down, because you are not an employee the salon owners insurance doesn’t have to replace your tools, retail or hair color. Your liability insurance is what is going to cover you in this instance. Call your auto insurance provider sometimes they give you discounts. There are also companies that cater to beauty professional specifically as well. 

What percentage of sales are run through a credit card processing machine? How much will the fees be? And what service do you plan on using? 

Square has made it so easy to take credit cards. They have some other awesome features and they now do payroll services! So if you have an assistant, you can run everything through their system. I Don’t recommend venmo. Its meant for friend to friend exchange so if someone disputes a charge they will give it to them even if they really did get that service then you are out that income.

What Type of environment do you want to rent a chair in?

(ex: What values, vision, or other aspects of a work environment do you desire?) Salon culture is important, Your vibe attracts your tribe. If you and your clients don’t fit into the space you will stick out and your clients will notice. You want to feel good about going to work everyday, so find something that makes sense for what you are trying to build.


How much money will you have to set aside annually for ongoing education (both professional and business related)?

Set a budget, put that money aside for the following year. Our  industry trends change so quickly these days. If you don’t budget for education to advance yourself as a stylist and as a business person you will get left behind. I usually budget anyway between $3,000 to $5,000 a year on education. Throughout the year I make a list  and set goals for education. Then in October I start researching when things are held and how much they will cost. This is so I have an idea in my head before the holiday season so that I can try to make enough in order to take all the classes on my list. Then on the first day of the year I plan out all my major education and spread it out through the year. Also if you use Square for credit card processing, depending on how much you swipe in services, they will approve you for a small business loan and then take a small present of your daily future deposit in order to pay it back.

Have questions regarding this post? You can email us at info@blackvioletconsulting.com.

Thank you for reading my post! If you liked it and you found value in what I shared leave a comment below. 

Lots of (hair) Love

Lesley D. Flanagan

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How to Stay Focused and Have a Clear Vision for Your salon.

You can do anything you want, you just can’t do everything you want. Have you every heard this saying? WE as humans have our limitations and shortcomings. Its just the way it is. We can't be everything. It would make things really boring in all honesty. You have to know what your talents are and you have to know your weaknesses. Concentrate on what you do well and put good people in your corner that can do the things you can't do well. 

As business owners and hairstylist we often want to do everything, but we just can’t It’s just too much and we get overwhelmed. Your business pays the price. Knowing who you and who you  are targeting is most important. Once you know what it is staying focused is were its at. If you happen to attract outside of that, then they're a bonus and that ok, but you can’t appeal to everyone. If you are everything to everyone, you are nothing to no one. Another one of those saying but its true, especial when it comes to marketing strategies and social media plans. Know who you are and who your target is. 

Here are my tips on staying focused on your path and your journey and how to combat overwhelm. 

Know what is most important and define it. 

I make lists and notes for everything. The notes section my phone is intense and most people get anxiety looking at it, but it works for me. I find comfort in it because all my thoughts are organized by categories and within those categories, I have different sub categories. Its all in one place on a device that is always with me. Figure out what works for you, but you have to brain dump it some place so you can organize it and edit as you go. Every month on a Sunday I go through and I delete what I've already done or I edit it to more closely resemble real life. 

Being actionable with you To Do List.

Having your To-Do List is great but you need to break it down into bite sizes in order to act on them. What's the point of having it if you don’t actually do it. 

Specific, Measurable, Achiveable, Relevant and Time specific, these are the qualities you use to quantify your goals. You need to hold yourself accountable. As long as you are moving forward it doesn’t mater how big or small that step is, its the direction that matters. 

Be real with yourself. 

Don’t try to be a massive overachiever by trying to do everything at once. Again break it down to real life possibilities. The reason eveyone thinks certain people are overnight successes is because no one was looking or paying attention when they where taking their small actionable steps. You are only one person and its important to have a small semi-balance of a life or else what are you working so hard for.

Did this resonate with you? What are some goals you are struggling with? Fee free to leave us a comment. 

Lots of (hair) Love, 

Lesley D. Flanagan

Commission Salon Owners: This is Why You're Losing Stylists to Booth Rental

I started my career in a chain commission salon. I worked behind the chair while also earning my degree in Fashion and Retail Merchandising. I had an hour and half commute both ways. I went to school full-time and my schedule was crazy. I had drive and motivation. I always had. I had a worth ethic that my immigrant parents instilled in me and I was going to succeed if it killed me (I didn't want to let them down). I did things the old school way, I earned it. Then I decide, I wanted to rent a chair so I could have more control over my schedule so that I could focus on salon stuff in the salon and school stuff at school (very early I realized the value of a receptionist and online booking). I was prepared for the amount of responsibility renting a chair. Most people aren't, but they want the freedom that come with it. 

The current generation coming out of hair school values things differently then when we left the academy. They are motivated by different things and they don’t understand the old way of doing things. They want to be a part of something and feel appreciated. They don’t do well with tough love. They also communicate differently. You have to find common ground. If you try to implement the old ways on them, where you have to start at the bottom and work your way up, they will leave. They need to know they are appreciated and valued, most of all they want to know they are making a difference. 

Traditional commission salons sometimes create unhealthy competition between stylists. Those who want to give the best service to their clients and don’t just care about the money and your numbers will leave. They want to make money yes but thats not their only motivation. They don’t do well being compared to their peers because they were told they are special and unique. Appeal to them. 

Don’t hire on the spot. too many salons do this and it effects your reputation. Actually do an interview, Have them do a hair cut on a model and do a trial run you need to make sure they are a good fit for you salon culture. Remember it starts with you. Your vibe attracts your tribe. Know what qualities you are looking for. There is nothing worse then having the wrong person working in your salon. Just like having a target market for clients you need to have one for stylists. 

They leave because they are no longer being fulfilled by what you are providing. Doing things just because that’s they way they have always been done is the fastest way to tank your business. But also remember you aren’t pizza you can’t make everyone happy. Encourage specialization after five years of experience. They need to have those five year to try everything. Other reason I left the commission salon, They made me provide services I hated doing. I wanted to do the things I enjoyed and felt the most creative. I was not getting that feeling doing Sally's Perm and Miss Bells screaming grandson. 

Every one needs to be on the same page when it comes to what you are trying to achieve. You need to communicate and give everyone a part or task. That’s how you create that inclusiveness they are looking for. It doesn't have to be something major, just something that appeals to their strengths. 

Also recognized and be gracious when someone is ready to move on to booth rental. Your reputation in this matter will proceed you. You don’t want others looking for a salon to not apply because they heard you pitched a fit when someone moved on to advance their career. 

Salon ownership is not for the faint of heart. Whether it’s booth rental, commission or team based, we all face the same obstacles. You have to have a vision and drive. You have to be willing to lose it all and at the same time never wanting to give up. I truly believe that not everyone is cut out for this. Hairstylist, salon owner, booth rental doesn’t matter. This industry is flooded every year with new licensed stylists and by the end of their first year they are no longer working. Schools are not properly preparing students. So it’s up to salon owners to figure how to place these individuals and give them additional education. You have to provide value by also providing education. Do your research. 

 

Thank you for reading my blog. If this resonates with you please leave a comment below. 

Lots of (hair) Love, 

Lesley D. Flanagn

Thinking About Salon Ownership? Why it may not be for you.

First things first, this is not to say you can't be an owner, I just want you to think about before you invest and find out its not your definition of success. 

Not everyone should be an owner and that ok! We shouldering be pushing people into opening a salon, there is a huge difference in ownership and working behind the chair. Just like you need to have passion and talent to be a good stylist, you need those same skills in running business. 

Owning a small business is hard. Its draining and it take blood, sweat and tears, sometimes literally. I was fortunate enough to know that it was a good fit for me very early on. I grew up with a father who was a self-starter and a go-getter. He ran two very successful businesses one of which I work in helping him with till this day. He was a good example and Someone who truly believed in the American Dream. He instilled in me some of the same traits an qualities that made him successful. 

#1 Being Organized 

You need to be organized and have systems in place to help you make it through the day and so everyone is on the same page. Quality control is where its at. Especially when you are trying to open a salon things can get hairy if you don't know whats next. 

#2 Drive

You have to know what drives you in order to succeed and money isn't the only driver. you have to have passion for the business side of the industry as well as the creative side. I'm lucky enough to know my source and my why, some people don't. You need to find it because its what keeps you moving forward on the hardest of days. 

# 3 Independence

Not needing anyone to validate that this is a good idea. There will be people in your life who will won't to deter you because they will be projecting their own feeling of failure on you. You have to know why you are doing this and you have to ignore them and be an independent thinking if you are going to move forward and succeed. 

#4 Thirst for Knowledge 

Even if you want to open and run a booth rental salon you have to have managerial skills and you have to find where you are going to develop them. You also need to have a clear view of your vision. Solid idea of business acumen, business plan, research and education on salon business models is vital. You have to take classes whether they are online or in person. Most community colleges offer free business training and you can also go to the Small Business Administration website and get info on everything from marketing plans to business plans. 

#5 Confidence

Confidence comes from being prepared and educated. Knowing what you want and don't want out of this life and this industry. Not everyones definition of success is the same. know what your is and have the confidence to back it up. 

#6 Time and Resources

Be selfish enough with your time and your money. You will have to sacrifice in order to get where your going. You will have to work hard and you will have to say no to people. You will have to miss events to run a business, but you also need to have balance. Figure out what works for you. 

#7 Being able to Delegate

You can't do everything your self. You can try but you will drop the ball or lose focus. Have people in place that are good at something you aren't or find way on the internet to substitute. There are bunch of valuable resources out there for accounting and online booking. Utilize them. 

#8 Being Able to Talk about yourself

Mostly so you can promote yourself. How will they know what you do if you don't tell them? Don't be sales just be yourself. The old, if you build it they will come, no longer works you will have to set aside time at least once a month to go to a networking event. 

#9 Resiliency

Small business ownership is a roller coast ride, bigger and badder then anything I've ever seen at Six Flags. Unless you hire someone to run your operations, so you can work behind the chair, you will have to take a day to do the stuff most find boring (not me but I'm a weirdo). You need to have administrative days so you can work on your business, inside of in it. 

#10 Being Patient 

Thomas Edison has almost a thousand attempts at inventing the light bulb. Dude! Can you image it taking that many attempts? It doesn't mater how long you take to get where you want to be in life or in business as long as you are taking actionable steps forward. 

If there was one super power I wish I had, its the power to give someone my drive and my motivation and have it work for them. Like Rogue from the X-Men, only in reverse. Inside of taking from them I would want to bestow the gift to them. 

Thank you for reading my post! If you liked it and you found value in what I shared leave a comment below. 

Lots of (hair) Love

Lesley D. Flanagan