ch 10: the beauty business

two options when you want to become your own boss

(1) owning your own business, or (2) renting a booth in an existing salon, spa, or barbershop

daily operation

As you can see, a new business has numerous requirements, documents, and considerations that must be sorted out before opening. Many of these will extend through the life of the business and inform how your salon, spa, or barbershop is run day to day. Business operation refers to these recurring processes or activities involved in the running of a business for the purpose of producing income and value. Business policies is the term for the rules and regulations adopted by a business to ensure that all clients and associates are being treated fairly and consistently. Even small shops and booth renters should have such policies in place. A final, foundational part of daily business is record keeping, the act of maintaining accurate and complete records of all financial activities in your business. A strong accounting and record-keeping system will serve you well in a number of ways, especially around tax time.

good telephone planning

Because it can be noisy, business calls to clients and suppliers should be made at a quiet time of the day or from a quiet area of the shop. Telephone etiquette is as follows: Use a pleasant telephone voice, speak clearly, and use correct grammar. A smile on your face will be reflected in your voice and counts for a lot. Show interest and concern when talking with a client or a supplier. Be polite, respectful, and courteous to all (even when people may test the limits of your patience). Be tactful. Do not say anything to irritate the person on the other end of the line.

Outline the Requirements of Owning a Business

Business owners have a very different job than beauty professionals. Typically, owners continue to owners continue to service clients while they manage the business. This is extremely time-consuming, and there is no guarantee of profits, which is why the adventure of owning your own salon, spa, or barbershop is definitely not for everyone.

determine business feasibility

Determining whether the business you envision is feasible means addressing certain practical issues. For example, do you have a special skill or talent that can help you set your business apart from other salons, spas, or barbershops in your area? Does the town or area in which you are planning to locate the business offer you the appropriate type of clientele for the products and services you want to offer? Based on what you envision for the business, how much money will you need to open the business? Is this funding available to you?

Financial Benchmarks for Salons, Spas, and Barbershops in the United States

Expenses & Percent of Total Gross Income Salaries and Commissions (Including Payroll Taxes): 53.5 Rent1: 3.0 Supplies: 5.0 Advertising: 3.0 Depreciation: 3.0 Laundry: 1.0 Cleaning: 1.0 Light and Power: 1.0 Repairs: 1.5 Insurance: 0.75 Telephone: 0.75 Miscellaneous: 1.5 Total Expenses: 85.0 Net Profit: 15.0 Total: 100.0 Courtesy Kopsa Otte CPAs & Advisors in York, NE, nationally known as the only accounting firm that specializes in salons and spas.

did you know?

When you open your own business, you should consult an attorney and an accountant before filing any documents to legalize your business. Your attorney will advise you of the legal documents and obligations that you will take on as a business owner, and your accountant can inform you of the ways in which your business may be registered for tax purposes. It is helpful to find professionals who have previous experience in the beauty business.

marketing strategies for building your business

A new salon, spa, or barbershop owner will want to get the business up and running as soon as possible to start earning some revenue and to begin paying off debts. This is where marketing—a strategy for how goods and services are bought, sold, and exchanged—comes in. Think of marketing as the methods you'll use to attract and retain satisfied clients. It is the means for selling and promoting your business. According to a survey conducted by the Professional Beauty Association (PBA), the top three ways that clients find a service provider are recommendations or referrals, a convenient location, and advertisements. With this is mind, the focus of many of your marketing strategies will likely be aimed at answering one question: What are your clients telling their friends about your business?

service records

Always keep service records or client cards that describe the treatments given and merchandise sold to each client. Using a salon-, spa-, or barbershop-specific software program for this purpose is highly recommended. All service records should include the name and address of the client, the date of each purchase or service, the amount charged, the products used, and the results obtained. Clients' preferences and tastes should also be noted.

selling in the salon, spa and barbershop

An important aspect of a beauty business's financial success revolves around upselling (adding on additional services), cross promoting (encouraging a client who is booked for one service to add another), and retailing (selling take-home or maintenance products). No matter the size or style of your business, adding services and retail sales to your service ticket means additional revenue. Remember: Your client will spend money during their visit. It is your job to encourage your client to invest in retail and services that will keep them coming back for more, while also helping to maintain the look you just gave them! It is important that we as professionals feel confident in selling services and retail. Remove any negative feelings or stereotypes you have toward sales or sales people and start fresh. Helpful and knowledgeable professionals make customer care their top priority. These people play a major role in the lives of their customers and are very valuable to clients because they offer good advice. In fact, the successful owner, like the successful professional, makes their living by giving complete beauty and wellness advice every day. Selling retail products benefits everyone.

create your brand identity

Creating your brand identity at the start is essential to building a unique, successful business. To create your brand, start by identifying a few simple concepts to use as building blocks for your brand identity. What is your point of difference? What is going to make a client want to visit your business versus the one across the street? What are you selling? Every salon, spa, or barbershop sells beauty services; think beyond the obvious. Are you selling a luxury experience, a family-friendly environment, or a cost-conscious express service? What is your aesthetic? Will there be a consistent color, theme, or uniform for your staff? Identifying the answers to the three main questions above will solidify your concepts and serve as reference. Refer to them frequently for inspiration, guidance, and a reminder of what your business is built upon.

the reception area

First impressions count, and since the reception area is the first thing clients see, it needs to be attractive, appealing, and comfortable. This is your business's nerve center, where retail merchandise will be on display, where the phone system is centered, where financial transactions will be carried out, and where your receptionist will stand (should you employ one). Make sure that the reception area is stocked with business cards and a prominently displayed price list that shows at a glance what your clients should expect to pay for various services.

example of a service menu

Hair Removal Eyebrow waxing: $7 full leg wax: $75 bikini wax (american): $40 hands/feet wax: $15 upper lip or chin wax: $15 underarm waxing: $30 chest wax: $25 Facials express facial: $25 basic facial: $45 back facial: $80 microdermabrasion: $80 body mask: $100 Makeup basic makeup: $30 tinting lashes/brows: $15 Salon Services child's haircut (under 12): $25 shampoo & blow-dry: $35 permanent hair color (cut not included): $65 hair color refresher: $30 hair extensions: free consultation required thermal hair straightening: $85 Barbering Services shampoo & cut: $40 beard & mustache trim: $15 and up hot shave: $35 gentleman's manicure: $20 gentleman's pedicure: $50 neck shave: $15 Nails manicure: $25 pedicure: $35 gel manicure: $30 nail designs: $5 and up pink/white: $30 nail repair: $4

handling complains over the phone

Handling complaints, particularly over the phone, is a difficult task. The caller is probably upset and possibly short-tempered. Respond with self-control, tact, and courtesy, no matter how trying the circumstances. Only then will the caller feel that they have been treated fairly. The tone of your voice must be sympathetic and reassuring. Your manner of speaking should convince the caller that you are really concerned about the complaint. Do not interrupt the caller. After hearing the complaint in full, try to resolve the situation quickly and effectively.

individual ownership

If you like to make your own rules and are responsible enough to meet all the duties and obligations of running a business, individual ownership may be the best arrangement for you. The sole proprietor is the individual owner and, most often, the manager of the business, who determines policies and has the last say in decision making, as well as assumes expenses, receives profits, and bears all losses.

partnership

In a partnership business structure, two or more people share ownership—although not necessarily equally. One reason for going into a partnership arrangement is to have more capital, or money to invest in a business; another is to have help running your operation. Partners can pool their skills and talents, making it easier to share work, responsibilities, and decision making. Keep in mind that partners must assume one another's liability for debts. Partnerships may mean more opportunity for increased investment and growth. They can be fantastic if the right chemistry exists; they can be disastrous if you find yourself legally linked to the wrong person. Your partner can incur losses or debts that you may not even be aware of unless you use a third-party accountant. Trust is just one of the requirements for this arrangement. Business partners share the responsibilities and the rewards.

the business plan

Regardless of the type of business you plan to own, it is imperative to have a thorough and well-researched business plan in place. A business plan is a written description of your business as you see it today and as you foresee it in the next five years (detailed by year). A business plan is more of an agreement with yourself and not legally binding. However, if you wish to obtain financing, it is essential that you have a business plan in place first. Many books, classes, DVDs, and websites offer much more detailed information than can be provided here, but below is a sampling of the kinds of information and materials that a business plan should include. Executive Summary. A summary of your plan and list of your objectives Vision Statement. A long-term picture of what the business is to become and what it will look like when it gets there Mission Statement. A description of the key strategic influences of the business, such as the market it will serve, the kinds of services it will offer, and the quality of those services Organizational Plan. An outline of employee and management levels and a description of how the business will run administratively Marketing Plan. An outline of all of the research obtained regarding the clients your business will target and their needs, wants, and habits Financial Documents. Projected financial statements, actual (historical) statements, and financial statement analysis Supporting Documents. The owner's resume, personal financial information, legal contracts, and any other agreements Business Policies. Policies that even small shops and booth renters should adhere to and that ensure that all clients and employees are treated fairly and consistently

purchase and inventory records

The purchase of inventory and supplies should be closely monitored. Purchase records help you maintain a perpetual inventory, which prevents overstocking or a shortage of needed supplies, and alert you to any incidents of theft. Purchase records also help establish the net worth of the business at the end of the year. Keep a running inventory of all supplies and classify them according to their use and retail value. Those to be used in the daily business operation are consumption supplies. Those to be sold to clients are retail supplies. Both categories have different tax responsibilities, so be sure to check with your accountant that you are charging the proper taxes.

the appointment book

The appointment book helps professionals arrange time to suit their clients' needs. It should accurately reflect what is taking place in the salon, spa, or barbershop at any given time. In larger establishments, the receptionist prepares the appointment schedule for staff members; in smaller shops, each person may prepare their own schedule. Increasingly, the appointment book is computerized and easily accessed through the business's computer system. Or, it may be an actual hardcopy book located on the reception desk. Some shops have websites with online booking systems, which tie into scheduling software.

booking appointments

The key duty of the receptionist is booking appointments. This must be done with care because services are sold in terms of time on the appointment page. Appointments must be scheduled to make the most efficient use of everyone's time—both the client and the beauty pro. Under ideal circumstances, a client should not have to wait for a service, and a professional should not have to wait for the next client. Booking appointments is primarily the receptionist's job, but when they are not available, the owner or manager, or one of the other professionals in small businesses, can help with scheduling. It is important for each person involved in working the reception area to understand how to book an appointment and how much time is needed for each service. Regardless of who actually makes the appointment, anyone who answers the phone or deals with clients must have a pleasing voice and personality.

the telephone

The majority of beauty business is handled over the telephone. Good telephone habits and techniques make it possible for the owner and employees to increase business and improve relationships with clients and suppliers. With each call, a gracious, appropriate response will help build the shop's reputation. For example, "Thank you for calling Spa Milady, Shannon speaking. How may I help you?"

viral marketing

The modern version of word of mouth is viral marketing, which, despite the different media, often still takes the form of referrals and recommendations. It is the personal communication about a service or product between target clients and their friends, relatives, and associates. The viral marketing technique can further pass your message along to hundreds and thousands of potential clients through social media sites and e-mail campaigns. Viral marketing is a phenomenon of the digital age that you can use, and may already have used, to spread your brand, by way of clients who are so motivated about your services that they tell their friends and family, along interpersonal networks that can reach into the thousands.

choose a business name

The name you select for your business explains what it is and can also identify characteristics that set your business apart from competitors in the marketplace. The name you select for your business will also influence how clients and potential clients perceive the business. The name will create a picture of your business in clients' minds. Note that once that picture exists, it can be very difficult to change it if you are not satisfied. In addition, once your business is named, it is complicated to make all of the legal, banking, and tax updates if you later want to change the name.

Identify the Elements of a Successful Salon, Spa, or Barbershop

The only way to guarantee that you will stay in business and have a prosperous business is to take excellent care of your clients. Clients visiting your shop should feel that they are being well taken care of, and they should always have reason to look forward to their next visit. To accomplish this, your salon, spa, or barbershop must be physically attractive, well organized, smoothly run, and, above all, sparkling clean.

social media for the business owner

The strength of this platform to engage and communicate with a community of people and as an ideal vehicle for viral marketing. Social media allows you to bridge geographical and cultural distances to reach a variety of people with the same interests and desires. It is a means to attract a following and have other people promote you and your business via viral marketing. This is accomplished by consistently providing content that is seen as valuable and relevant to your audience and by providing your online community with avenues to interact with your brand outside of the salon, spa, or barbershop itself. The following are a few ways you might use social media to provide consistent content oriented around your business: - Write a blog reflecting your knowledge, talent, and skills with beauty and wellness tips and resources. - Post beauty and wellness tips of the day. - Network with cosmetic and beauty brands and give your personal review of new products. - Start a beauty and wellness advice column. - Don't forget to follow your social media best practices.

advertising

The term advertising encompasses promotional efforts that are paid for and are directly intended to increase business. Advertising includes all activities that promote your salon, spa, or barbershop favorably, from newspaper ads to radio spots to charity events that the business participates in, such as fashion shows or community outreach. In order to create a desire for a service or product, advertising must attract and hold the attention of readers, listeners, or viewers. Once again, satisfied clients are the very best form of advertising, so make your clients happy! Then, have your clients work for you. Develop a referral program and a loyalty program in which the referring client reaps a reward. If you have some experience developing ads, you may decide to do your own advertising. Or you can hire an agency or ask a local newspaper or radio station to help you produce an ad. As a general rule, an advertising budget should not exceed 3% of your gross income. Make sure you plan well in advance for holidays and special yearly events, such as proms, New Year's Eve, or the wedding season. Make certain you know what you are paying for. Get everything in writing. No form of advertising can promise that you'll get business. Sometimes, local circulars can work well. You must know your clientele, which types of media they use, and what kinds of messages attract them. Here are some tools you may choose to use to attract customers to your salon, spa, or barbershop: Newspaper ads and coupons A website If you don't have a large budget now, buy your domain name and keep that ownership current. You can set up a site very inexpensively and as your business grows, you can build it to have many pages and features. A website is an easy way for new clients to find you through Internet searches or friends sharing links. E-mail newsletters and discount offers to all clients who agree to receive such mailings Always include an Unsubscribe link. You can also purchase e-mail lists targeted to your demographic to help you build your subscriber list. Website offerings, including those on your own website, social networking websites, and blogs Direct mail to mailing lists and your current client list Classified advertising Giveaway promotional items, such as branded combs, or retail packages, like shampoos and colognes Window displays that attract attention and feature the shop and your retail products Radio advertising Television advertising Community outreach: Volunteer at men's and women's clubs, church functions, political gatherings, charitable affairs, and on TV and radio talk shows Donations of your services for local organizations like school fundraisers Client referrals In-shop videos promoting your services and products An on-hold message featuring your business's best attributes Many of these vehicles can help you attract new clients, but the first goal of every business should be to maintain current clients. It takes at least three visits for a new client to become a loyal current client. Encourage your staff to have their guests pre-book their appointments: Just because a client has visited the shop 100 times doesn't mean they will come again. By having a pre-booking system in place, you are guaranteeing future business. Once you have a loyal client base, it is far less expensive to market to that base. That is why you should follow up every visit to determine the client's satisfaction and personally contact any client who has not been in for more than eight weeks.

corporation

A corporation is an ownership structure controlled by one or more stockholders. Incorporating is one of the best ways that a business owner can protect their personal assets. Most people choose to incorporate solely for this reason, but there are other advantages as well. For example, the corporate business structure saves you money in taxes, provides greater business flexibility, and makes raising capital easier. It also limits your personal financial liability if your business accrues unmanageable debts or otherwise runs into financial trouble. Characteristics of corporations are generally as follows: Corporations raise capital by issuing stock certificates or shares. Stockholders (people or companies that purchase shares) have an ownership interest in the company. The more stock they own, the bigger that interest becomes. You can be the sole stockholder (or shareholder), or you can have many stockholders. Corporate formalities, such as director and stockholder meetings, are required to maintain a corporate status. Income tax is limited to the salary that you draw and not the total profits of the business. Corporations cost more to set up and run than a sole proprietorship or partnership. For example, there are the initial formation fees, filing fees, and annual state fees. A stockholder of a corporation is required to pay unemployment insurance taxes on their salary, whereas a sole proprietor or partner is not. Your accountant may suggest that your business become an S corporation (small business corporation), which is a business elected for S corporation status through the Internal Revenue Service (IRS). This status allows the taxation of the company to be similar to a partnership or sole proprietor, as opposed to paying taxes based on a corporate tax structure. Or your accountant may suggest that your business become registered as a limited liability company (LLC), which is a type of business ownership combining several features of corporation and partnership structures. Owners of an LLC also have the liability protection of a corporation. An LLC exists as a separate entity, much like a corporation. Members cannot be held personally liable for debts unless they have signed a personal guarantee.

franchise ownership

A franchise is a form of business organization in which a firm that is already successful (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name in exchange for a fee. When you operate a franchise salon, spa, or barbershop, you usually operate under the franchisor's guidance and must adhere to a contract with many stipulations. These stipulations ensure that all locations in the franchise are run in a similar manner, look the same way, use the same logos, and, sometimes, even train in the same way or carry the same retail products. Franchise ownership can have many benefits. Franchises offer the advantage of a known name and brand recognition, and the franchisor does most of the marketing for you. Also, many have protected territories, meaning another franchise with the same name cannot open up within your fixed geographic area. However, franchise agreements vary widely in what you can and cannot do on your own. Owning a franchise is no guarantee of making a profit, and you should always research the franchise; talk to other owners of the franchise's shops; and have an attorney read the contract and explain anything you do not understand, including your precise obligations and arrangements for paying the franchise fee. In most cases, whether or not you are profitable, you must pay the fee.

types of business ownership

A salon, spa, or barbershop can be owned and operated by an individual, a partnership, or a corporation or franchise. Before deciding which type of ownership is most desirable for your situation, research each option thoroughly. There are excellent reference tools available. You can also consult a small business attorney for advice.

creating a vision and mission statement for the business

A vision statement is a sweeping picture of the long-term goals for the business: what it is to become and what it will look like when it gets there. A mission statement is a guide to the actions of the organization: it spells out the overall goals, provides a path, and contains the core values to help guide decision making. The mission statement lays the foundation for how your company's strategies are created. Goals are an essential set of benchmarks that, once achieved, help you to realize your mission and your vision. It is important to set realistic goals for both the short term and long term.

the receptionist

A well-trained receptionist is crucial to the life of the business, as the receptionist is the first and last person the client contacts. The receptionist should have an image that reflects your brand, be pleasant and patient, greet each client with a smile, and address each client by name. Efficient, friendly, and consistent service fosters goodwill, confidence, and satisfaction. In addition to filling the crucial role of greeter, the receptionist handles other important functions, including answering the phone, booking appointments, informing beauty professionals that a client has arrived, preparing daily appointment information for the staff, and recommending additional services and products to clients. The receptionist should have a thorough knowledge of all retail products carried by the shop so that they can also serve as a salesperson and information source for clients. During slow periods, it is customary for the receptionist to perform certain other duties and activities, such as straightening up the reception area and maintaining inventory and daily reports. Personal calls or personal projects are done on personal time, not at work.

incoming telephone calls

An incoming call is often your client's first impression of your business. Clients usually call ahead for appointments with a preferred beauty pro but may call to cancel or reschedule. The person answering the phone should have the necessary telephone skills to handle these calls. When you answer the phone, say, "Good morning (afternoon or evening), thank you for calling The Milady Salon. How may I help you?" or "Thank you for calling Milady Barbers. This is Jonathan speaking. How may I help you?" Some businesses require that you give your name to the caller. The first words you say tell the caller something about your personality. Let callers know that you are glad to hear from them. Answer the phone promptly. A good rule of thumb is to pick up the phone by the fourth ring. On a system with more than one line, if a call comes in while you are talking on another line, ask to put the first person on hold, answer the second call, and ask that person to hold while you complete the first call. Take calls in the order in which they are received. If you do not have the information requested by a caller, either put the caller on hold and get the information, or offer to call the person back with the information as soon as you have it. Do not talk with a client standing nearby while you are speaking with someone on the phone. Have one conversation at a time to avoid doing a disservice to both clients

allocation of money

As a business operator, you must always know where your money is being spent. A good accountant and an accounting system are indispensable.

protection against fire, theft and lawsuits

As a business owner, you must protect the business, clients, and staff on several levels. Here are some of the ways you can reduce risk and ensure this protection: Ensure that your business has adequate locks as well as a fire alarm system, a burglar alarm system, and a surveillance system. Purchase liability, fire, malpractice, and burglary insurance and do not allow these policies to lapse while you are in business. Become thoroughly familiar with all laws governing your discipline and with the safety and infection control codes of your city and state. Keep accurate records of the number of employees, their salaries, lengths of employment, and Social Security numbers as required by various state and federal laws that monitor the social welfare of workers. Always check with your regulatory agency if you have any questions about a law or regulation. Ignorance of the law is no excuse for violating it.

managing personnel

As a new business owner, one of your most challenging tasks will be managing your staff. At the same time, leading your team can also be very rewarding. If you are good at managing others, you can make a positive impact on their lives and their ability to earn a living. If managing people does not come naturally, don't despair. People can learn how to manage other people, just as they learn how to drive a car or perform hair services. Keep in mind that managing others is a serious job. Whether or not it comes naturally to you, it takes time to become comfortable with the role. Human resources (HR) is an entire specialty in its own right. It not only covers how you manage employees, but also what you can and cannot say when hiring, managing, or firing. All employers must be familiar with various civil rights laws, including Equal Employment Opportunity Commission (EEOC) regulations and the Americans with Disabilities Act (ADA), which pertains to hiring and firing as well as business design for accessibility. Every business should have a written personnel policies and procedures manual, and every employee must read and sign it. If you choose to use a payroll company, they can provide HR services and employee manuals for a nominal fee. The more documented systems you have for managing human resources, the better. There are many excellent books, both within and outside the beauty industry, that you can use as resources for learning about managing employees and staff. Spend an afternoon online or at your local bookstore researching the topic and purchasing materials or registering for classes that will educate and inform you. Once you have a broad base of information, you will be able to select a technique or style that best suits your personality and that of your salon, spa, or barbershop.

beauty professional should study and understand beauty business because

As they become more proficient in their craft and their ability to manage themselves and others, beauty pros may decide to become an independent booth renter or even a business owner. In fact, most owners once worked as professionals. Even if they spend their entire career as an employee of someone else's establishment, beauty pros should be familiar with the rules of business that affect the salon, spa, or barbershop of which they are a part. It is also important they look at their career as their own business. To become a successful entrepreneur, they will need to attract employees and clients to their business and maintain their loyalty over long periods of time. Even if they think they will be involved in the artistic aspect of the industry forever, business knowledge will serve beauty pros well in managing their career and professional finances as well as their business practices.

booth rental, chair rental

Booth rental, also known as chair rental, involves renting a booth or station in a salon, spa, or barbershop. This practice is popular in shops all over the United States. Many people see booth rental or renting a station as a more desirable alternative to owning a business. In a booth rental arrangement, a professional generally rents a station or work space in a salon, spa, or barbershop for a weekly fee paid to the owner. Booth renters are solely responsible for their own clientele, supplies, record keeping, and accounting, and have the ability to be their own boss with very little capital investment. Booth rental is a desirable situation for many beauty professionals who have a large, steady clientele and who do not have to rely on a business's general clientele to keep busy. Unless you are at least 70% booked all the time, however, it may not be advantageous to rent a booth. Although it may sound like a good option, booth renting has its share of obligations, such as the following: - Keeping records for income tax purposes and other legal reasons - Paying all taxes, including higher Social Security (double that of an employee) - Carrying adequate malpractice insurance and health insurance - Complying with all IRS obligations for independent contractors—go to irs.gov and search for independent contractors to learn more - Using your own telephone and booking systems - Collecting all service fees, whether they are paid in cash or via a credit card - Creating all professional materials, including business cards and a service menu - Purchasing all supplies, including back bar and retail supplies and products - Tracking and maintaining inventory - Managing the purchase of products and supplies - Budgeting for advertising or offering incentives to ensure a steady flow of new clients - Paying for all continuing education - Working in an independent atmosphere where teamwork usually does not exist and where shop standards are interpreted on an individual basis - Adhering to state laws and regulations—to date, two states (Pennsylvania and New Jersey) do not allow booth rental at all; others may require that each renter in an establishment hold their own establishment license and carry individual liability insurance; always check with your state regulatory agency As a booth renter, you will not enjoy the same benefits as an employee of a salon, spa, or barbershop would, such as paid days off or vacation time. Remember, as a booth renter, when you do not work, you do not get paid. Perhaps most importantly, you must continually attract new clients and maintain the ones you have, which means working the hours your clients need you to be available. For more information on booth rental as a business option, reference Milady's Booth Renting 101: A Guide for the Independent Stylist.

business regulations and laws

Business regulations and laws, are any and all local, state, and federal regulations and laws that you must comply with when you decide to open your business or rent a booth. Since the laws change from year to year and vary from state to state and from city to city, it is important that you contact your local authorities regarding business licenses, permits, and other regulations, such as zoning and inspections. Additionally, you must know and comply with all federal Occupational Safety and Health Administration (OSHA) guidelines, including those requiring that information about the ingredients of cosmetic preparations be available to employees. OSHA requires Safety Data Sheets (SDSs) for this purpose. There are also many federal laws that apply to hiring and firing, payment of benefits, contributions to employee entitlements (for example, social security and unemployment), and workplace behavior. Understanding the laws and rules of owning a business is imperative to running a successful salon, spa, or barbershop. The laws and rules not only lay the foundation of acceptable guidelines regarding hiring and firing, they also build a framework for day-to-day policies and procedures and safety. Not following the laws and rules can result in costly fines and heavy penalties. It is important to become very familiar with the local, state, and federal laws and rules before you open your business. When you do open your business, you will need to purchase insurance that guarantees protection against financial loss from malpractice, property liability, fire, burglary and theft, and business interruption. You will need to have disability policies as well. Make sure that your policies cover you for all the monetary demands you will have to meet on your lease.

Resources

Design http://www.beautydesign.com Click on the Design Center tab (at the top) to see various salon layouts and photos of salons from all over the world. http://www.collinsmfgco.com Check out the gallery and design options at this manufacturer of salon, spa, and barbershop equipment. Human Resources http://www.dol.gov/compliance/guide This is the U.S. Department of Labor's online employment law guide. http://www.eeoc.gov Research relevant equal employment opportunity regulations at the U.S. Equal Employment Opportunity Commission website; check out the compliance manual. http://www.hr.blr.com This site offers human resources-related business and legal reports. Find a forum, dozens of topics, and regulations by state. Small Business Ownership and Operation http://www.business.com Find advice on business topics from A to Z and business resources for accounting, sales, marketing, technology, and more. http://www.isquare.com The Small Business Advisor. http://www.salonbuilder.com Find information on starting a beauty business. http://www.strategies.com This site offers salon and spa business growth seminars, training, and coaching. Salon, Spa, and Barbershop Software http://www.harms-software.com http://www.shortcuts.net http://www.salonbizsoftware.com http://www.saloniris.com http://www.salon-software.com

the importance of record keeping

Good business operations require a simple and efficient record-keeping system. Proper business records are necessary to meet the requirements of local, state, and federal laws regarding taxes and employees. Records are of value only if they are correct, concise, and complete. Proper bookkeeping methods include keeping an accurate record of all income and expenses. Income is usually classified as receipts from services and retail sales. Expenses include rent, utilities, insurance, salaries, advertising, equipment, and repairs. Retain all check stubs, cancelled checks, receipts, and invoices. A professional accountant or a full-charge bookkeeper is recommended to help keep records accurate. Rent in New York City may be a different percentage of sales than in Duluth, Minnesota. The term full-charge bookkeeper refers to someone who is trained to do everything from recording sales and payroll to generating a profit-and-loss statement. The most important part of record keeping is having the ability to defend your business in the case of an audit by the federal or state government and to have accurate proof of all sales made and taxes paid.

drawing up a lease

In most cases, owning your own business does not mean that you own the building that houses your business. When renting or leasing space, you must have an agreement with the building's owner that has been well thought out and well written. The lease should specify clearly who owns what and who is responsible for which repairs and expenses. You should also secure the following: Exemption of fixtures or appliances that might be attached to the salon, spa, or barbershop so that they can be removed without violating the lease Agreement about necessary renovations and repairs, such as painting, plumbing, fixtures, and electrical installation Option from the landlord that allows you to assign the lease to another person - obligations for the payment of rent are thus kept separate from the responsibilities of operating the business should you decide to bring in another person or owner

payroll and employee benefits

In order to have a successful business, one in which everyone feels appreciated and is happy to work hard to service clients well, you must be willing to share your success with your staff whenever it is financially feasible to do so. You can do this in a number of ways: Make it your top priority to meet your payroll obligations. In the allotment of funds, this comes first. It will also be your largest expense. Whenever possible, offer hardworking and loyal employees as many benefits as possible. Either cover the cost of these benefits, or simply make them available to employees, who can decide if they can cover the cost themselves. Provide staff members with a schedule of employee evaluations. Make it clear what is expected of them if they are to receive pay increases. Create and stay with a tipping policy. It is a good idea both for your employees and your clients to know exactly what is expected. It is also important to be familiar with the tax laws around tipping. Put your entire pay plan in writing. Create incentives by giving your staff opportunities to earn more money, prizes, or tickets to educational events and trade shows; rewards can inspire employees to achieve more. Create business policies and stick to them. Everyone should be governed by the same rules, including you!

written agreements

Many written agreements and documents govern the opening of a business, including leases, vendor contracts, employee contracts, and more. These agreements detail, usually for legal purposes, who does what and what is given in return. You must be able to read and understand them. Your business plan, although not legally binding, falls under this category; it will follow your business throughout the entire process from start-up through many years in the future. The plan should include - a general description of the business and the services that it will provide; - area demographics, which consist of information about a specific population, including data on race, age, income, and educational attainment; - expected salaries and cost of related benefits; - an operations plan that includes pricing structure and expenses, such as equipment, supplies, repairs, advertising, taxes, and insurance; - projected income and overhead expenses for up to five years. A certified public accountant (CPA) can be invaluable in helping you gather accurate financial information. The chamber of commerce in your proposed area typically has information on area demographics.

the front desk

Most owners believe that the quality and pricing of services are the most important elements of running a successful salon, spa, or barbershop. Certainly these are crucial, but too often the front desk—the operations center of the business—is overlooked. The best businesses employ professional receptionists to handle the job of answering phones, scheduling appointments, greeting clients, and attending to client needs.

planning the layout

One of the most exciting opportunities ahead of you is planning and constructing the best physical layout for the type of business you envision. Maximum efficiency should be the primary concern. For example, if you are opening a low-budget establishment offering quick service, you will need several stations and a small- to medium-sized reception area because clients will be moving in and out fairly quickly. Retail sales are essential to a profitable beauty business. Make sure the products you carry and the space you design reflect the importance of high retail sales However, if you are opening a high-end business, where clients expect the quality of the service to be matched by the environment, you may want to plan for more room in the waiting area. In fact, you might choose to have several areas in which clients can lounge and enjoy light snacks or beverages—from soda and coffee to alcoholic beverages. Most salons, spas, and barbershops also provide complimentary Wi-Fi access to their guests. Caution: If you plan to serve alcoholic beverages at your business, check with your local and state laws to make sure you obtain all proper licenses and insurance. Layout is crucial to the smooth operation of a salon, spa, or barbershop. Once you have decided on the type of business that you wish to run, seek the advice of an architect with plenty of experience in designing for the beauty industry. For renovations, a professional equipment and furniture supplier will be able to help you. Ideally, the design you develop should include the following: - Ample aisle space - Space for each piece of equipment - Quality mirrors - Fixtures, furniture, and equipment chosen on the basis of cost, durability, utility and appearance - Decoration and paint that is thematic and pleasing to the eye - Restrooms for clients and employees - Handicap-accessible facilities and doors - Good plumbing and lighting for services - Heating, ventilation, and air-conditioning - Sufficient electrical outlets and current adequate to service all equipment - Storage areas - Display areas - Attractive, furnished and comfortable reception or waiting area Costs to create even a small salon, spa, or barbershop in an existing space can range from $75 to $125 per square foot, if not more. Renovating existing space requires familiarity with building codes and the landlord's restrictions before you do anything. All the plumbing should be in the same area, and electrical wiring must be up to code. If they are not, you'll pay thousands of dollars extra. Before you begin, get everything in writing from contractors, design firms, equipment manufacturers, and architects. It is a good idea to get three quotes on everything from contractors and cleaning services to work stations and equipment. Don't be afraid to negotiate whenever you can. Try to estimate how much each area in the business will earn, so you can use space efficiently. An inviting retail display in your reception area is a good investment; on the other hand, an employee break area produces no income. In addition to start-up costs for creating your business, you'll need financing for operational expenses. Realistically, you should plan to have at least several months and up to one year of expenses available to help get you up and running. It takes most new shops about six months to begin operating at full capacity.

opening your own business

Opening your own salon, spa, or barbershop is a huge undertaking—financially, physically, creatively, and mentally—because you will face challenges that are complex and unfamiliar to you. In addition to the business plan, before you can open your doors you'll need to - decide what products to use and carry, - what types of marketing and promotions you will employ, - the best method and philosophy for running the business and creating a culture, - whom to hire if you need additional staff. Whether you're opening a small destination spa, large franchise nail salon, or modest independent barbershop, you must carefully consider some basic issues and perform fundamental tasks.

purchasing an established business

Purchasing an existing salon, spa, or barbershop could be an excellent opportunity, but, as with anything else, you have to look at all sides of the picture. If you choose to buy an established business, seek professional assistance from an accountant and a business lawyer. You may have the option of purchasing all the assets of a shop or some or all of its stock. It is important to know, however, that you are not purchasing the staff or clientele. There is no guarantee that with new ownership the staff will be retained or that the clients will continue to return. In general, any agreement to buy an established business should include the following items: Financial audit to determine the actual value of the business once the current owner's bookings are taken out of the equation — often, the owner of a salon, spa, or barbershop brings in the bulk of the business income, and it is unlikely you will retain all the former owner's clients without a lot of support and encouragement from that former owner Written purchase and sale agreement to avoid any misunderstandings between the contracting parties Complete and signed statement of inventory (goods, fixtures, and the like) indicating the value of each article If applicable, a transfer of a note, mortgage, lease, or bill of sale, including an investigation by the buyer to determine whether there are defaults in the payment of debts Confirmed identity of owner Use of the business's name and reputation for a definite period of time Disclosure of any and all information regarding the shop's clientele and its purchasing and service habits Disclosure of the conditions of the facility—if you are buying the actual building, a full inspection is in order; many other legalities also apply, as noted by your realtor and attorney Non-compete agreement stating that the seller will not work in or establish a new salon, spa, or barbershop within a specified distance from the present location Employee agreement, either formal or informal, that lets you know if the employees will stay with the business under its new ownership—existing employee contracts should be transferable Purchasing an established business can be an excellent opportunity that requires careful handling.

booking appointments by phone

When booking appointments, write down the client's first and last name, their phone number, their e-mail address, and the service booked. Many businesses call the client to confirm the appointment one or two days before it is scheduled. Automated systems can send an e-mail or even a text message confirmation. All employees should be familiar with all the services and products available in the salon, spa, or barbershop and their costs as well as which professionals perform specific services, such as color correction or microdermabrasion. Be fair when making assignments. Don't schedule six appointments for one professional and only two for another (unless it's necessary because you are working with specialists). However, if someone calls to ask for an appointment with a particular professional on a particular day and time, make every effort to accommodate the client's request. If that beauty pro is not available, handle the situation in one of the following ways: Suggest other times that the professional is available. If the client cannot come in at any of those times, suggest another professional. If the client is unwilling to try another professional, offer to call the client if there is a cancellation at the desired time.

business operations

Whether you are an owner or a manager, there are certain skills that you must develop in order to successfully run a salon, spa, or barbershop. To run a people-oriented business, you need: - excellent business aptitude, good judgment, and solid diplomatic skills - knowledge of sound business principles. Because it takes time to develop these skills, you would be wise to establish a circle of contacts—business owners, both within your industry and without—who can give you advice along the way. Consider joining a local entrepreneurs' group or your city's chamber of commerce in order to extend the reach of your networking. The chamber of commerce is a local organization of businesses and business owners whose goal is to promote, protect, and further the interests of businesses in a community. Smooth business management depends on the following factors: - Sufficient investment capital - Efficient management - Good business procedures - Strong computer skills - Cooperation between management and employees - Trained and experienced personnel - Excellent customer service - Proper pricing of services.

create a business timeline

While initially you will be concerned with the first two aspects of the timeline, once your business is successful, you will need to think about the others as well. Year 1: It could take a year or more to determine and complete all of the aspects of starting the business. Years 2 to 5: This time period is for tending to the business, its clientele, and its employees and for growing and expanding the business so that it is profitable. Years 5 to 10: This time period, if successfully achieved, can be for adding more locations, expanding the scope of the business, constructing a larger space, or including anything else you or your clients need and want. Years 11 to 20: In this time period, you may want to move from being a working beauty professional into a full-time manager of the overall business and begin planning for your eventual retirement. Year 20 and onward: This may be the perfect time to consider selling your successful business or changing it in some way, such as taking on a junior partner and training them to take over the day-to-day operations of the business so you can have time away to explore interests or hobbies.

choose a location

You will want to base your business location on your primary clientele and their needs. Select a location that has good visibility, high traffic, easy access, sufficient parking, and handicap access

personnel

Your personnel is your staff or employees. The size of your business will determine the size of your staff. Large salons, spas, or barbershops may require receptionists, assistants, and housekeepers in addition to beauty professionals with a variety of specializations. Smaller establishments often employ personnel who are expected to perform more than one type of service. For example, a barber might also be the shop's colorist. Ultimately, whether your business is large or small, high end or economical, its success depends on the attitude and quality of work done by the staff. When interviewing potential employees, consider the following: Level of skill. What is their educational background? When was the last time they attended an educational event? How long have they been in the industry? What can they bring to the organization beyond their technical skills? Personal grooming. Do they look like professionals you would consult for personal grooming advice? Image as it relates to the business. Are they too progressive or too conservative for your environment? Does their image reflect the image of your business? Overall attitude. Are they mostly positive or mostly negative in their responses to your questions? Do they seem self-motivated and self-directed? Communication skills. Are they able to understand your questions? Can you understand their responses? Work history. Have they been at a previous business for many years, or do they hop from shop to shop? Are they bringing a clientele, or do they expect you to build one for them? Making good hiring decisions is crucial. Undoing bad hiring decisions is costly and painful for all involved and can be more complicated than one might expect.

what does it take to become your own boss

significant financial investment strong line of credit preparation to be a great artist and consummate businessperson = higher success