Chapter 10 - The Beauty Business

A good rule of thumb is to pick up the phone by the second ring.

False (A good rule of thumb is to pick up the phone by the fourth ring.)

An S corporation is a type of ownership combining several features of corporation and partnership structures.

False (An S corporation is a small business corporation, and the status allows for taxation similar to a partnership, and not like a corporation.)

The majority of beauty business is handled using the Internet.

False (The majority of beauty business is handled over the phone.)

If you like to make your own rules and are responsible enough to meet all the duties and obligations of running a business, a franchise may be the best arrangement for you.

False (When you operate a franchise, you usually operate under the franchisor's rules and guidance.)

If an important client calls while you are working with another client, you should take the call.

False (You should only have one conversation at a time; do not talk on the phone if a client is standing in front of you.)

Includes projected financial statements and historical statements

Financial Documents

Includes owner's resume, personal financial information, and legal contracts

Supporting Documents

Ryan and Tish have decided to structure their new business as a partnership. What is a main risk of structuring a business in this way?

They will have to assume liability for one another's debts or losses.

An incoming call is often a client's first impression of a business.

True

Answering the phone with a smile on your face will be reflected in your voice.

True

One reason for going into a partnership arrangement is to have more capital to invest in a business; another is to have help running your operation.

True

With a corporation, income tax is limited to the salary that you draw and not the total profits of the business.

True (With a corporation, income tax is limited to the salary that you draw and not the total profits of the business.)

_______ is the adding on of additional services.

Upselling

Provides a long-term picture of what the business is to become

Vision Statement

Ryan and Tish have opened their business and are a hit! They have loyal customers, wonderful employees, and have started turning a profit, all in the first 10 months of operation. Tish has suggested that they begin thinking about where to open their next location. What is the most helpful response that Ryan could give when Tish brings this up?

We should continue operations as is for at least another four or five years before we start thinking about new locations.

Ryan tells Tish that he has been thinking about how their business will be different from others, what it will look like, and what types of goods and services they will sell. What is Ryan developing by asking these questions?

a brand identity

Overall, how many visits will a client make in order to become a loyal customer?

at least three

The only way to guarantee a successful and prosperous business is to __________.

take excellent care of your clients

Which employee can serve as a salesperson and customer service representative, as well as perform certain administrative and housekeeping tasks?

the receptionist

If you were a business advisor meeting with Ryan and Trish, what is the most likely recommendation or advice that you would give them during your first meeting?

to consider all options except individual ownership

When utilizing email newsletters and advertisements, make sure to always include a(n) __________.

unsubscribe link

What is the modern version of "word of mouth"?

viral marketing

If you are opening a high-end business, you may want to plan for more room in the __________.

waiting area

An important tip to keep in mind for effective advertising is to __________.

know your clientele

What is the best tool for guaranteeing return business?

prebooked appointments

Which is not a necessary part of your spa, salon, or barbershop layout/design?

refrigeration for refreshments

It takes most new shops about __________ to begin operating at full capacity.

six months

Which business tool allows you to bridge previous geographical or cultural distances and reach a variety of people who may be interested in your services?

social media

Raises capital by issuing stock certificates or shares

Corporation

Individual owner determines policies and has the last say in decision making

Sole Proprietorship

An example of _________ is encouraging a client who is booked for a haircut to also get a facial.

cross-promoting

Costs to create even a small salon, spa, or barbershop in an existing space can range from ___________ per square foot.

$75 to $125

Offers protection of personal assets

Corporation

Ensures all clients and employees are treated fairly and consistently

Business Policies

Which pertains to the rules and civil rights laws surrounding the hiring and firing of individuals?

EEOC (The Equal Employment Opportunity Commission)

Summarizes your plan and states your objectives

Executive Summary

Offers the advantage of a known name and brand recognition

Franchise

Requires paying a fee to a firm that is already successful, regardless of profit

Franchise

According to the Professional Beauty Association (PBA), all of the following are the top three ways that clients find service providers, except __________.

Google searches

________ is a specialty that covers the management of employees, as well as legality and various personnel policies.

HR (Human Resources)

Which is a major difference between large and small salons, spas, or barbershops?

Larger shops need receptionists, smaller shops don't necessarily require them.

Outlines research obtained regarding the clients that the business will target

Marketing Plan

__________ should be the primary concern when it comes to a salon, spa, or barbershop's layout.

Maximum efficiency

Describes key strategic influences of the business

Mission Statement

Outlines employees and management levels and describe how the business will run

Organizational Plan

Trust is just one of the requirements

Partnership

Two or more people assume one another's liability for debts

Partnership

Ryan and Tish are veterans in the beauty industry and have decided to leave their current employers and start their own business. If you were to give them advice on how to start this huge undertaking, what would you advise be the first step they take?

Research and develop a business plan.

__________ is/are essential to a profitable beauty business.

Retail sales

___________ is the selling of take-home or maintenance products.

Retailing

Individual owner assumes expenses, receives profits, and bears all losses

Sole Proprietorship

Fixtures, furniture, and equipment should be chosen for the spa, salon, or barbershop based on cost, __________, utility, and appearance.

durability

A(n) __________ can help to make clear what is expected of employees in exchange for pay increases.

employee evaluation

As a successful business owner, your largest expense will be __________.

employee payroll