How Do You Decide if Booth or Suite Rental is Right for You?

Note About this post: I speak about booth renting, but the same theory applies if you consider renting a suite.

A lot of hairstylists leap without thinking about booth rental. Sometimes, it works out because they have good instincts; sometimes, it fails because they don’t have a plan or vision.

Booth renting can be the best or worst thing that ever happened to you. You can be in control of everything you do, but you also have the responsibility of 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, you need at least 250+ clients to profit from booth rental. You have to see at least 30-60 clients a month. This can vary depending on how much you charge and how many days you work, but it’s a good number to keep at the front of your mind. Also, remember that not all your clients might follow you; this is a good time to evaluate who you want to follow you. You need to be aware of this and have a plan to fill those gaps.

What is your client retention rate? 

The current national average is 45%. Yuck! If you are in tune with who you are targeting and providing quality service, it's easy to get your percentage up. A well-trained and educated service provider is usually in the 80-90% range for retention rates. No one is perfect, so people rarely hit 100%, primarily 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 remember that the salon owner keeps 60% of that number, but very little is their profit. The salon owner is paying for your payroll taxes, supplies, marketing, and, as mentioned above, your education. There are overhead costs that you might not realize until you are alone in the world 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 rent a chair and evaluate your service totals and how much of that is profits, in some cases, it evens out to still being a 40% commission, but you are doing all the work. It's cool if you want that, you need to be honest with yourself about it. 

How much money are you generating in tips monthly?

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

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

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

What are your expenses?

Like I mentioned above, there is a possibility that not all of your clients will find you unless you are 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 must ensure you can float yourself in the meantime, or you’ll get frustrated or put undue stress on your family and significant other.

How much can you afford and how much are you willing to pay for a 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 is. The monthly or weekly rent is generally determined similarly to how we value homes or apartments. So if the salon owners' rent and overhead for the space are high, she will divide that by the number of chairs in her space. Again, it depends on the area you are looking at.

Will you need an assistant? 

If you book for a half-hour, you will need help. Otherwise, you must account for 15 minutes after every client to cash them out, rebook, and sell them retail. This is where having an assistant can come in handy. You can also look for a booth rental salon that provides a receptionist, which costs the owner money, so that she will add that to the rent. Either way, it will cost you money if you think about it. 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 the minimum wage in your state, and you will have to pay their employment taxes. Determine 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 can run a second column. 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’s insurance that you can be added to?

Some states require you to provide health insurance; if you don’t, you will have to pay a fee at tax time. Luckily, my husband's company had a great plan and was on board with it. If that's not the case for you, I highly recommend contacting someone to get info on what you 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 must provide your own medical insurance.

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

With the latest technological advancements, keeping track of your books can be pretty affordable. You still need an accountant to file, but you can use services like QuickBooks Self-Employed to manage and track 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 ensure I had enough for the day, then go home at night, wash, dry, and fold for the next day. Some salon owners in the booth rental model also work behind the chair and don’t want to bring home laundry at night, so they provide laundry facilities. Again, that depends on 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; it’s 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 whole book, you need a marketing plan and a constant flow of new clients to sustain your business. Things happen in life, and you don’t want to wake up one day and realize you have no clients. You will slowly bleed out if you don’t have a marketing or social media marketing plan.

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 will cover you in this instance. Call your auto insurance provider; sometimes, they give you discounts. Some companies cater to beauty professionals 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 excellent 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 unless you have a business Venmo. Otherwise, it is meant for a friend-to-friend exchange, so if someone disputes a charge, they will give it to them. Even if they did get that service, you are out of that income.

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

(For example, 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 culture, you will stick out and your clients will notice. You want to feel good about going to work every day, 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, and 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 business person, you will get left behind. I usually budget between $3,000 and $5,000 yearly 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 before the holiday season and can try to make enough to take all the classes on my list. Then, on the first day of the year, I plan out all my primary education and spread it throughout 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 percentage of your daily future deposit to pay it back.

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

If you’re considering booth rental but are unsure if it’s the right move, download our free “Booth Rental Readiness Checklist” to assess your situation. You can download it here.

✨ Want expert eyes on your numbers, retention, and marketing strategy before you leap? Book a 1:1 strategy session with Lesley to get clear, confident, and profitable.

Lots of (hair) Love

Lesley D. Flanagan