Preparing to rent a salon suite and going out on your own? If you have a strong client base, experience and business savvy, great. Those are the top attributes of successful renters. But before you rush in, follow these prep steps:
1. Get a client list. Most renters had between 60 and 250 active clients before they decided to go solo and thought about 80-90% would follow them. They were mostly right about the latter but one study says renters have 122 clients on average, and that’s a thin margin. Aim for 250 if you work full-time.
Paul Orlandi, Meraki Hair Studio at Salon Lofts in Mayfield Heights, OH, says getting a list isn’t hard since everyone is socially connected and most stylists have business cards. He recommends focusing on numbers.
“When you are thinking about going out on your own, you should be booked no less than 85% of your available hours,” says Orlandi. “What is your weekly sales total? Can you survive if that number goes down by 20%?”
As a former salon owner with a staff of 17, Orlandi simply gave his clients two weeks’ notice when he decided to rent a suite so he could travel as an educator. But he admits that most owners will tell you to leave immediately if they find out you are planning to rent. That makes list-gathering tricky.
Brandie Kekoa, whose Be Kekoa is in Sola Salon Studios, Temecula, CA, says mum is always the word. “Through relationship-building, find at least one thing in common with each of your clients,” she advises. “Find a reason to obtain their phone numbers because of that common interest. Those clients will follow you.”
Michael Booth, owner of Michael’s Booth at Porte Noire in Winter Park, FL, says that about a month before going solo, he “very carefully” started telling clients. “It was so hard to keep the news quiet,” he says. “I walked them to their cars or talked to them outside. I kept it top secret, and they knew to do the same. I was terrified the owner would find out and fire me. I also kept very detailed records because I knew that the salon could withhold that information. I only lost about 10% of my guest list. That’s less than half of the usual 20%, because I moved just 4.1 miles away.”
Social media connections are key to list gathering, especially if you can’t hand out business cards. If that feels too sneaky, you may not be ready to rent; talk to salon owners about compromises. You might be happier.
A fair number of renters say they started with too few clients or that they were promptly dismissed without a list when the owner discovered their plans. The ones who succeeded were great marketers who had service specialties (think color correction) and were prepared to build fast.
Kortney Norris, whose namesake suite is in Salon Lofts, Indianapolis, IN, had special skills in formal updo styling and wedding makeup, which she used to get started, along with a liquidated 401K—a real risk-taker’s move.
“I had less than 50 clients but had booked 15 big weddings on my own before I left,” she says. “That way I would be making almost the equivalent of my salary for a while. I always posted and tagged wedding work, so the clients’ friends saw it. Without a big list, be prepared to do what you have to do.” (As she built business, Norris also worked part-time at a blow-dry bar.)
- Decide what you’ll charge. Most renters keep their prices the same when they move; Norris cut hers by $10 to $15. Kekoa says that if clients trust you enough to follow you to your own suite, you should return the favor and make their transition as seamless as possible: “You can’t reward them with an immediate price hike.”
Autumn Morris, who rents a Sola Suite for her GlamLocks Hair Lounge in Encinitas, CA, says she kept her current clients at the same pricing and increased charges for new ones.
“I never considered that since I’m now an owner, some would stop tipping me,” she says. “This only happened with a few clients and after a year, I gradually raised prices on cuts and color.”
- Estimate expenses. Rent and inventory will be your biggest expenses but estimate them all. Renee Noice and Cindy Durbin-Wible, who share a suite at The Salon House for their Cireé Hair Design in Champaign, IL, compiled start-up and weekly expense lists that you can use, too.
START UP COSTS:
- Rent, extra furniture or personal decor items
- Any deposits due to suite owners
- Design and/or printing for business cards, menus and websites (include hosting)
- Inventory and retail
- Renter’s/ liability insurance
- Door signage, if permitted
- Bookkeeping system
- Appointment/schedule system
- Phone/internet service (some suites include the latter)
- Credit card set-up and fees
- Magazine subscriptions
- Credit card fees
- Accountant fees
- Phone bill
- Money set aside for taxes
Orlandi, who brought inventory from his salon, says his biggest expenses were rent and ongoing supplies. To control fixed rent costs, consider the best suite for you, he says: “Do you want a large suite with lots of windows or is a smaller space with no outdoor view ok? A premium space could cost you $100 more a week. How far away is it? Clients may love you but if your city has harsh winters, a 20-minute drive in July could mean fighting blizzards in January, which could have your clients looking for closer stylists or extending appointments.”
4. Do the math. Here’s where you’ll really see if you have a head for business. Can you determine your income by estimating the number of clients you’ll see in the first month and their service charges? Can you then subtract your true expenses? Did you account for start-up costs separately? These numbers are why Orlandi recommends you have three months’ worth of business and living expenses in savings.
Says Kekoa, “The more comfortable your savings back-up plan, the less stress you’ll have in the first three months. You’ll give yourself more opportunity to be creative rather than panicked.”
Booth, whose suite offered many amenities, took advantage of Porte Noire’s offer for two weeks of free rent or $500 in products. (Many suites make such deals.) He doubled his money by applying the latter to a Paul Mitchell promo: buy hair color and get the same dollar amount in retail for free. His basic first month’s budget, in which he included some start-up costs, looked like this:
Rent ($299/week) $1,196
Licensure $60 (business and city)
On-line booking $25/mo.
Total Expenses $2, 041
Gross Income $8,100
Pre-Tax Profit $6,059
“I also had to get my IRS Federal Employer Identification Number to operate and pay my federal taxes,” he adds
5. Investigate business management tools, including tax, POS and scheduling software/apps. With no receptionist, salon website or simple W-2, technology is your best friend. Most renters say their suites helped sign them sign-up on website templates with online booking.
“Ninety percent of my clients book online; it beats phone tag or a 2 a.m. text,” says Orlandi. “Also consider a separate cell phone for your business. Weekends are my time. If your suite doesn’t offer online booking, there are plenty of options you can pay for.”
“I gathered pros and cons on different salon software,” comments Morris. “I started with the lowest-priced package and upgraded my software every year to have more ways to engage with my clients.
6. Ask yourself what legal issues affect you. Do you have a non-compete contract or one that says client files are salon property? Speak to an attorney before moving.
“I’ve seen too many people sign-up for a suite only to get a letter from their boss saying they’ll be sued if they leave because of a non-compete,” says Orlandi. “Don’t take anything with you that’s not yours—not client cards, formulas or records, or you will have trouble.”
Once you move, creating an LLC protects your personal assets if you are sued by a client. “The cost was $150,” says Booth. “I went online, filled out the form, paid the fee and it was done! You just have to check that your business name isn’t taken.”
After three years, Morris made her business an S-corporation on the advice of Sola and her accountant: “I advise all new suite renters to give themselves the first year to embrace all the changes that come with being an owner, then decide,” she says.
7. Define your brand. Most renters name their salons name after themselves, but decor, colors, business cards, websites and social pages should all reflect your brand. Will your business have an eco/green stance? What will your brand say about you?
For Booth, “Michael’s Booth” was a no-brainer. “I went with a black, chrome or silver and yellow decor,” he says. “Black is essential to being a stylist The silver give me a pop of shiny metallic and yellow is a nice primary color that ties it all together. My business cards are the square shape that is super-hot right now.”
“Consistency is key,” adds Orlandi. “My décor includes a lot of Marilyn Monroe. It creates a theme that subconsciously keeps me on clients’ minds. They constantly tell me that whenever they see Marilyn, they think of me.
8. Talk to other renters before you take the plunge. Ask what technology is essential for running a business, how they network and get motivated, specifics about the suite business/franchise they rent from and what they learned the hard way. What were other’s biggest discoveries?
Says Norris, “The thing I wish I’d been told was to find an account you trust right away and get a plan.”
Adds Orlando, “What really surprised me when talking with suite renters who made the move from employee to business owner is that they didn’t have any idea what to do with their money. ‘How do I pay myself?’ is the biggest question I hear.”
“The best advice I got was to pay your federal and state taxes on a quarterly basis; other renters warned me they are the easiest to fall behind on,” says Booth.
Final advice: If your salon agreement says you cannot contact clients directly, don’t do it. Talk to an attorney first. Also, beat boredom and burn-out with continuing education. There are tons of free classes and many major franchises hold free education events. On-line education is a money saver but never underestimate how isolating working alone can be at first. Hit the shows, network wherever you can and introduce yourself to fellow suite-renters on your first day in the building. In many locations, you’ll find the freedom you want and the camaraderie you left behind.
Note: This article is not intended as legal advice. Contact a local employment or business attorney regarding any legal issues.