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.
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Lots of (hair) Love
Lesley D. Flanagan