Oh, the ignorance and arrogance of inexperienced, impulsive beauty professionals! You know who you are–sitting there with your head full of false assumptions about self-employment, so convinced that you can “do better yourself” despite having no actual experience to base that unshakable confidence on. In this post, we’re going to have a serious talk; one that will introduce you to the harsh realities and burdensome responsibilities of self-employment, prepare you to do the hard work required to ensure success, and get you motivated to focus on what really matters and do what must be done to minimize your risk.
If you’ve read my first book (or my second book), then you know that I differentiate independent owner/operators (professionals we have traditionally referred to as “booth renters”). Independence comes in so many forms now. Booth rental is no longer the only form of independence, so distinction is necessary.
Microsalon (n.): a small, independent salon business, owned and operated entirely by a single service provider.
A microsalon owner can be a booth renter, studio operator, home salon owner, mobile professional (in the few areas where that kind of thing is legal), and an on-site freelancer.
I’m often contacted by microsalon owners who tell me that other consultants “blew them off” because they were “too small.” I’m an unusual kind of business consultant for more reasons than one. Aside from my winning personality and proclivity for violent analogies and creative profanity, I am set apart from other consultants because I advise owners of large salon operations and microsalon owners. Whether they have ten locations or are operating out of a renovated janitorial closet doesn’t matter to me—businesses of all sizes have problems and I am happy to deliver solutions.
Businesses of all sizes come with tremendous risk, but microsalons in particular are highly risky ventures.
You are not “too small” to fail. You may not be entering into a full-blown enterprise, but the risks you face are very real. You will be putting your money on the line and moving into unknown, lonely territory, without so much as a single employee to lean on when times get tough. Do you need to know your numbers? Hell yes. Do you need business education? You bet.
Your earning potential is extremely limited and, when compared to traditional salon ownership, your operating costs are obscenely high. Your responsibilities don’t differ from those of a typical salon owner—however, you will be solely responsible for carrying them yourself.
The biggest mistake I see microsalon owners make: failure to plan.
When I say that they “fail to plan,” I don’t mean that they fail to pick decor or come up with cute logos and brochures. For some reason, they have plenty of time to agonize over those frivolous decisions, but dedicate almost no time to the things that actually matter.
When you wake up in the morning, whether your business is a ten location empire or a tiny corner in an open air booth rental salon, there are several questions you need to know the answers to off the top of your head.
1.) How much money do I need to make today to break even?
2.) What is my retention rate?
3.) What is my acquisition rate?
4.) What am I doing TODAY, TOMORROW, and NEXT WEEK to keep my business thriving?
5.) Where do I want to be in five years and what am I doing to get there?
Everyone needs a business plan. Period.
Salon owners with employees have multiple advantages over microsalon owners—particularly when it comes to maximizing sales and reducing costs.
- Many microsalon owners won’t have the need (or the ability) to make the larger orders from distributors necessary to qualify for bulk discounts, driving their product costs up.
- Instead of sharing a professional liability policy with multiple professionals at a discounted rate, microsalon owners have to insure themselves at a higher cost, driving operational expenses up.
- Microsalon owners don’t have the benefit of having marketing materials or advertising provided to them (another critical recurring expense most microsalon owners don’t plan or budget for).
- Microsalon owners are solely responsible for paying the entirety of their employment taxes, 15.3% of their income for federal taxes alone), cutting their profit margins down.
- Microsalon owners must cover all of their own cost-of-doing-business expenses (salon software, business phone line, towel service, promotional materials, products, tools, web design and maintenance, and so much more), pushing their service prices up.
- Microsalon owners pay far more rent per square foot. Rental rates run $800-1,200 per month for a 110 square foot studio, on average. The rent on an entire 1,200 square foot commercial unit may top out at $1,300-$2,500 a month, depending on the area. Regardless of the town/city, I’ve found the rental rates for microsalon owners to be obscenely high in comparison to the commercial units their microsalons are located within. Renters pay around $7.30 per square foot, versus their landlord’s cost of $1.10 per square foot.
- Microsalon owners who rent stations or studios are literally surrounded by competitors, whereas a salon owner’s lease will usually prohibit their landlord from allowing a competing business from opening within the same strip mall. (If you think competition is fierce between salon locations in the same area, try competing against ten or twelve other professionals under the same roof.)
- Microsalon owners are the sole workers in their business. When Microsalon Megan is sick, injured, or otherwise absent from her business, she can’t call in a staff member to step in and pick up her slack. Salon Owner Sally, on the other hand, could easily rearrange staff schedules to cover gaps.
The lack of support and inability to keep expenses in check can make microsalon ownership significantly harder than traditional salon ownership.
Simply put: your risk of failure is extremely high.
Recognize the realities and slow down. Take the time to plan, prepare, and protect yourself.
☐ Understand your obligations as a self-employed business owner.
☐ Thoughtfully prepare a comprehensive business plan.
☐ Design a brand that defines and distinguishes your small business from others.
☐ Create a polished website and social presence to draw your ideal clientele.
☐ Work your numbers to determine service prices that will cover your operational costs and support your lifestyle.
☐ Learn how to negotiate a lease that works in your favor so you NEVER end up in a legal battle with a landlord.
☐ Know which professionals you should hire and when to hire them.
☐ Assess your microsalon with a critical eye to determine if the quality of your services justify the prices you’re charging–or whether it’s time to raise them up.
The Microsalon Owner’s Toolkit contains everything you need to make the planning process as simple and painless as possible.
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- The Microsalon Owner’s Planning Checklist
- The Microsalon Owner’s Pricing Spreadsheet, a 7-page spreadsheet that calculates your service prices for you!
- The Microsalon Owner’s Pricing Guide, a 28-page instruction manual that will walk you through the process of using the Service Pricing Spreadsheet,
- The Microsalon Owner’s Business Plan Design Guide, a 2-page overview detailing the anatomy of a business plan. Simply answer the questions in each section and you’ll have a solid framework!
- The Microsalon Owner’s Lease Component Checklist, a 3-page document that simplifies lease terms to keep you from signing an incomplete (or unfair) rental agreement,
- The Microsalon Assessment Tool: Be Worth What You Charge, an 11-page checklist and salon evaluation resource
- The Microsalon Owner’s Website Design Guide, a practical 2-page reference detailing each page your site should have and what each page should contain.
- Employer Obligations for Microsalon Owners, a 9-page document that covers the basics of employment law for solo entrepreneurs. (If you plan to hire an assistant or receptionist at some point, you’re going to need to read this document.)
- Suggested Resources for Microsalon Owners, an 8-page reference guide where you can find every awesome thing I recommend—domain registrars, hosting companies, web designers and DIY website builders, mailing list management services, free fonts, free stock photos, salon management tools, accounting software for solo entrepreneurs, and so much more. Learn what each resource does, why they’re great, and why I recommend them.
$39.99Add to cart
Your microsalon is not “too small” to benefit from this downloadable. Quite the opposite. Your stakes, risks, and expenses are very real–and more numerous than you realize.
If you have learned about the high price of independence the hard way, share your story in the comments. I’d love to hear from you! (Plus, you’ll be doing naive professionals a big favor–many of them are in desperate need of a reality check.)
15 Responses
I am definitely a person who learned the hard way on booth renting from a “micro salon” concept. You take the biggest problem with the traditional booth rental model – stylists who do not have a legal obligation to behave like consistently rational sane business people – and you combine it with the idea of renting a hip apartment in the coolest part of town. Doesn’t need to be big, just needs to get me near the action I need, like a suburb where my clientele already exists or a central area of a city where my clients or new clients would want to be. And the cooler the area of town your clients like to be, the more expensive it is to rent. These “micro salon” owners (unless they are in the business or industry veterans, which A LOT are not) just look at our talents, our clienteles, our cash flow and they salivate. They are leeches on our entire industry and should be shunned by people who respect the craft and education that what we have to offer clients. Not to mention you are literally a sheet of drywall away from “the competition”! The private suite salon concept I currently lease with has become so petty that when some stylists/”managers” of these suite concepts are bored and they think you are getting too busy or shining too bright, they actually sabotage business! Literally, the only people who I see “excel” (I use this term loosely for my second example) in these environments are people who work part time, but have 5+ years behind the chair under their belt, or selfish, entitled adult babies who don’t work well with a group. Ugh, I think I have micro salon PTSD.
I completely, COMPLETELY agree! I have always hated this concept. -.-
I agree. In the early part of my career I apprenticed straight out of beauty school for 2 European men. I was required to assist 5 days a week plus train (cut , color) models. I watched how a successful salon was run. Several years down the road and after much dedication I trained apprentices and owned my own salon, with booth renters. Renting in a large salon or renting a room of your own within a building is essentially the same thing. We all want independence, but not everyone is professional. Be selective where you work, know your worth and keep up on your education!
I’m so confused.
Until you tell me specifically what you’re confused about, I’m confused also, lol. Let me know exactly what’s causing your confusion so I can help!
I’m a micro-salon owner of 20 years, over the years of renters, I’ve had 4 independent contractors rent space from me, luckily they were all amazing professionals who went on to expanding their business beyond a room rental, good for them. It’s kept my overhead down to some small extent.
My newest business neighbor, we literally share a wall between our business, tries to sabotage my business. I’m not going to get into specifics, that would require an entire page, suffice to say, I just deal with the petty bullshit mentality. You would think if we’re both in the service industry our main concern is our paying guest clients relaxation factor. It’s very frustrating to have a colleague in the industry who’s my business neighbor who is a bully.
At any rate, I struggle to survive because of my own lack of future business plan, knowing exactly what my overhead expenses are to run my business, i have a bookkeeper to handle my books because its daunting for me to do it, I’m oblivious as to what my numbers are. Dumb ass I am.
I’ve always relied on referrals for my business.
Boy have times changed.
My retention rate is close to 70% mainly because I seem to be getting a few clients that want quality home care but don’t want to do the facials to maintain and or correct and heal their specific troubled skin care conditions. I’m a facialist, it’s what I do. Some waxing..
I do excellent on retail sales, over 50% of my income is from my retail sales. I need to cut down my overhead and gain new monthly facial clients. I simply don’t know where to start or how to accomplish this, I feel handicapped when it comes to advertising and being I don’t have any Capitol to work with I’m literally dying on the vine.
Sure I have my regulars, it’s not enough to pay my bills and to live.
I’m cash strapped and don’t know how to achieve a profit. I took a loss the last few years and it’s very frustrating.
I need help.
I’ve read every article you’ve published and really understand everything you talk about, especially about the over saturation in the beauty industry.
There are so many ” salon coaches” nowadays, it’s over the top expensive to join some of these mastermind groups.
Where am I going with this long rant? I don’t know, I’m contributing to the thread and also wondering what my next plan of action should be to stay afloat In such a competitive market.
Thank you for the well written articulate articles you’ve shared, I just shake my head and think to my self, what a completely different industry this has become from 20 years ago. In some respects it’s super exciting with all the advancements that have come to fruition, I keep up with education, I’m dialed in, and am excellent in my profession, and on the flip side of the coin, it’s scary trying to keep UP with the Kardashian’s of the beauty industry.
I really enjoyed reading your article a out not making friends with clients, thanks for that reminder.
I’m so sorry you’re struggling. In this industry, it can be really difficult to compete (especially in an oversaturated market), when DIY is sapping the market. Owning a salon really does require diligent management, constant research, and ongoing assessment for correction. It’s not like it was twenty years ago when we could just pop open a shop. There aren’t as many routine salon clients as there used to be, so owners have to become more innovative and aggressive in how they market and manage. It’s not enough to be great at servicing clients, anymore. To succeed, salon owners either need to step out from behind the chair (or in your case, the table) and step into the role of business manager, or hire someone who can fill that role for them. With so many salons and so many alternatives, it’s a war out there now.
My problem there is literally NO commission based or team based salons in my town of 60,000. There are booth rental salons and corporate salons (only of the haircut variety) I never wanted to own a salon, but I have to booth rent in order to even work in this industry. 25 years in and it’s frustrating.
It sucks. Booth rental has fragmented this industry to such an extreme degree, most professionals who would prefer a team-based salon can’t even find one.
1.) How much money do I need to make today to break even?
2.) What is my retention rate?
3.) What is my acquisition rate?
4.) What am I doing TODAY, TOMORROW, and NEXT WEEK to keep my business thriving?
5.) Where do I want to be in five years and what am I doing to get there?
Where would you suggest one looks for ways to figure this stuff out?
1.) Knowing how much you need to break even is as simple as doing the math. (What are your operating costs and your product/disposable costs per service?)
2. & 3.) Most salon management softwares have reports built in that will give you retention and acquisition metrics.
4.) Planners! Whatever planning system you use, you should have one. Set goals and deadlines. Every day, assess where you are in relation to where you want to be. Ask yourself that question every day. Follow through.
5.) This one is tricky. Your five year plan will likely change as you gain more experience and as your life changes. Set one, but be flexible. 🙂
Let’s just put it this way I did hair for 25 years. Six years ago I decided to rent a room and finally be out on my own after dealing with lunatic salon owners that couldn’t even open the shop up on time much less keep it clean and running orderly. It started out great, tons of clients, good profits very nice incentives to give to clients. But my problem was clients not being loyal and always wanting something for nothing, no matter what incentives I had. I think giving someone ten to fifteen dollars off for referring someone is very generous. My prices stayed the same for the six years along with my retail. Example: relaxers 70-75 including cut and any style. I never made friends with my client but I was always very polite and I had a code of ethics no political talking no religious talking no sex talking what I had learned basically when I was in the military. I did mostly ethnic hair though I can do any hair and offered it but it got to the point where people take you for granted, canceling on you constantly even though a late or cancellation fee came out if there was no 24 hour notice. I got tired of the disrespect and no concern for my time or profession. I think the worst thing was when the rent went up. I ended up paying $1000 a month or should I say $250 a week for a 100 square-foot room, my home is 3000 ft.² and I pay A house note of $844. I thought to myself that this is damn ridiculous. All that came to an end when I got into a bad accident and lost the use of being able to work without being in pain. I gladly let it go but I sit here and think about how much I miss doing hair but the stress and headache that it caused to stay afloat and deal with people that were not loyal was too much and broke my heart.
It’s hard for everyone, but it can be exceptionally difficult if you’re specializing in ethnic hair. It seems like every few months, I read an article by a Black professional or salon owner who calls for major changes to both the way minority salons do business and the way both clients and professionals treat one another in that specific sector. (If you’re interested, this one has been my favorite for years and the one I point to for those who need to be informed.) Luckily, the majority of the people calling for those changes are helping to make them a reality. For instance, here’s Bed of Nails in NYC and Like the River in Atlanta.
I don’t know for sure if you were in a similar situation previously, but if so–while some of the problems you experienced are typical of the industry, I’m willing to bet more than a few of them were due to the issues found exclusively within that sector of the industry.
I have been doing hair for 25 years, all over the globe. I took education when it was offered, I was passed too, and I paid it forward. After finally settling down I decided to open a microsalon. I prefer to call it a Studio because while I’m savvy when I apply myself, I like to think of myself as an artist, through and through.
Hair is what I love to do. It paid for a college education that I never used. It gave me the chutzpah to be a Boss and not a bossy bi&*#. I still love it; even with the bone spurs on the bottom of my feet and the lower back trouble from wearing killer shoes to look the part. (I really can’t stress the importance of not doing that to yourself. Wear ugly shoes, you’ll thank me later.)
I could be making more money at a larger salon – I could be making More of a profit there too. Don’t get it twisted – I make a profit and I make art. That’s the dream – only I get to do it without listening to all the cackling, people who can’t control their volume, and clients who stir drama with big spoons, jealous and insecure co-workers, or a receptionist who gives advice on what Youtube videos your clients should watch to DIY hair. For the expense I get Peace. I get a clean environment. I get to make decisions about me, myself, and I. And I need to tell you – it’s worth it. Cute kitschy decor be damned.
I see all the negativity in other posts; because this endeavor is not easy. It means working hard. Pleasing other people. And a little bit of sacrifice. However, for me, this was and is – just a dream come true. I opened my Studio with 10 grand, a full clientele, and an excellent work ethic.
Be smart. Have integrity. Be clean. Have inspiration. Be true to yourself.
And always dream big..
You can do it, if you really want to.
Absolutely. The problem that contributes most to self-employed professionals failing so quickly stems from the narrative that schools and rental companies push—the “self-employment is so great and easy and you make so much money!” lie.
It’s totally doable if you’re prepared and willing to do what it takes. In my opinion, the freedom and flexibility are also entirely worth the expense and extra work—especially if you aren’t having to work in a building full of other renters.