Chapter 32 THE SALON BUSINESS

If you choose to purchase an existing salon, your agreement to purchase should include: (10)

.1. A financial audit to determin the actual value of the business. 2. Written purchase and sale agreement 3. Complete and signed statement of inventory 4. an investigation to determine whether there are defaults in the payment of debts if renting, lease or taking over a note. 5. confirmed identity of owner. 6. Use of the salon's name and reputation for a defintie period of time. 7. Disclosure of any and all infomration regarding the salon's clientele and its purchasing and service habits. 8. Disclosure of the conditions of the facility 9. Noncompete agreement stating that the seller will not work in or establish a new salon within a specified distance from the present location. 10. An employee agreement.

A lease should specify the following? (3)

.1. Exemption of fixtures or appliances that might be attached to the salon so that they can be removed without violation the lease. 2. Agreement about necessary renovations and repairs, such as painting, plumbing, fixtures, and electrical installation. 3. Option from the landlord that allows you to assign the lease to another person.

What are the obligations of renting a booth? (13)

.1. keeping records 2. Paying all taxes 3. Carrying adequate malpractice insurance and health 4. complying with all IRS obligations 5. Using your own telephone and booking system 6. Collecting all fees 7. creating all professional materials 8. purchasing of all supplies 9. tracking and maintaining inventory 10. Managing the purchase of products and supplies\ 11. Budgeting for advertising or offering incentives 12. Paying for all continuing education 13. Working in an independent atmosphere 14. Adhering to state laws and regulations.

A practitioner is not available at the time a client requests. How can you handle this situation? (3)

.1. suggest other times that the professional is available 2. If the client cannot come in at any otf those times, suggest another professional 3. If the client is unwilling to try another professional, offer to call the client if there is a cancellation at the de3sired time..

Advertising must ___________.

.Advertising must attract and hold the attention of readers, listerners or viewers.

You have no future plans to own your own business. Why is it still important for you to understand the rules of business that affect salons?

.Business knowledge will serve you well in managing your career and professional finances, as well as your business practices.

Another term for booth rental is?

.Chair rental

T or F. Salon owners do not usually work on clients of their own.

.False

A set of benchmarks that help business owners achieve their mission and vision is called _________.

.Goals

What are the elements of a good business location?

.Good visibillity, high traffic, easy access, sufficient parking, and handicap access

What is capital?

.Money needed to invest in a business.

Which state does not currently allow booth rental?

.Pennsylvania

An important aspect of a salon's financial success revolves around the sale of ________.

.additional salon services and take home or maintenance products.

Ideally, you should consult with a(n) ________ to help you plan the layout of your salon.

.architect

What are salon policies?

.are the rules and regulations adopted by a salon to ensure that all clients and associates are being treated fairly and consistently.

What additional tasks will a receptionist perform in the salon during slow periods?

.straightening up the reception area and maintaining inventory and daily reports. making any necessary personal calls or otherwise being away from the front desk.

To run a people oriented business you need: (2)

1. An excellent business sense, aptitude, good judgement and diplomacy 2. A knowledge of sound business principles.

A receptionist must have the following qualities: (3)

1. Appearance that conveys your salon's image 2. Knowledge of the various services offered 3. Unlimited patience with both clients and salon personnel.

Supplies that are used in the daily business operation are _______ and those to be sold to clients are __________.

1. Consumption supplies 2. Retail supplies

What kind of advertising venues are available to salons? (11)

1. Direct mail to mailing lists 2. classified advertising 3. E-mail newsletters and discount offers 4. Web site offerings 5. Giveaway promotional items or retail packages 6. Window displays 7. Radio advertising 8. Television advertising 9. Community outreach by volunteering 10. Client referrals 11. In-salon videos

What can you do to protect your salon against fire, theft, and lawsuits?

1. Ensure that the business has adequate locks, fire alarm system, and burglar alarm system. 2. Purchase liability, fire, malpractice, and burglary insurace 3. Become familiar with all laws governing cosmetology and with the safety and infection control codes of your city and state. 4. Keep accurate records of the number of employees, their salaries, lengths of employment, and Social Securtiy numbers as required. 5. Ignorance of the law is no excuse for violating it. Always check with your regulatory agency if you have any quesitons about a law or regulation

Name 2 important civil rights laws all employers must be familiar with:

1. Equal Employment Opportunity Commission regulations 2. The Americans with Disabilities Act .

List the 8 parts of a business plan.

1. Executive Summary 2. Vision Statement 3. Mission Statement 4. Organizational Plan 5. Marketing Plan 6. Financial Documents 7. Supporting Documents 8. Salon Policies

What should be included in your business plan? (6)

1. General description of the business 2. The services that it will provide 3. area demographics 4. Expected salaries 5. cost of related benefits 6. An operations plan that includes pricing sturcture and expenses.

The receptionist handles important functions such as: (6)

1. Greeter 2. answering the phone 3. Booking appointments 4. informing professional that a client has arrived 5. Preparing daily appointment information for the staff 6. recommending additional services to clients

When using the telephone you should: (4)

1. Have a pleasand voice, speak clearly, and use correct grammar 2. Show interest and concern when talking with a client or a supplier 3. Be polite, respectful, and courteous to all, even though some people may test the limits of your patience. 4. Be tactful. Do not say anything to irritate the person on the other end..

When interviewing potential employees, consider the following? (5)

1. Level of skill 2. Personal grooming 3. Image as it relates to the salon 4. overall attitude 5. communication skills.

What are some ways you can share your success with your staff? (7)

1. Make it your top priortiy to meet your payroll obligations. 2. Whenever possible, offer hardworking and loyal employees as many benefits as possible. 3. Provide staff members with a schedule of employee evaluations. 4. Creat and stay with a tipping ploicy 5. Put your entire pay plan in writing 6. Create incentives 7. Creat salon ploicies and stick to them.

In a booth rental arrangement, a practitioner generally: (4)

1. Rents a station or work space in a salon from the owner 2. Is solely responsible for their own clientele, supplies, record keeping and accounting 3. Pays the owner a weekly fee for use of the booth 4. Becomes their own boss for a very small amount of money.

Smooth business management depends on the following factors: (8)

1. Sufficient investment capital 2. Efficiency of management 3. Good business procedures 4. Strong computer skills 5. Cooperation between management and employees 6. Trained and experienced salon personnel 7. Excellent customer service delivery 8. Proper pricing of services

To be successful in the beauty industry, you should be prepared to be two things:

1. attract employees and clients to your business 2.Maintain their loyalty over long periods of time.

The 2 main options for being your own boss are:

1. owning your own salon 2. renting a booth in an existing salon

Why is the name you choose for you salon important? (3)

1.How clients and potentioal clients perceive the business 2. it explains what it is 3.also identify characteristics that set your business apart from competitors

What are 3 types of ownership?

1.Individual Ownership / Partnership 2. Corporation 3.Franchise

List the basic factors to carefully consider when opening a salon. (11)

1.creat a vision and mission statement for the business with Goals 2. Creat a Business timeline 3. Determine business feasibility 4. Choose a business name 5. Choose a location 6. Written agreements 7. Business regulations and laws 8. Insurance 9. Salon operation 10. Record Keeping 11. Salon Policies.

The term personnel refers to a salon's _____ or _________.

staff or employees.

When booking appointments what information should you ask for?

take down the client's first and last name, their phone number, and the service booked

What kinds of insurance must you purchase when you open your own business?

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..

Appointments must be scheduled to make the most efficient use of everyone's __________.

time.

Describe a partnership.

two or more people share ownership although not necessariily equally.

What determines the number of salon employees?

The size of your salon will determine the size of the employees.

T or F. Most salon owners have worked as stylists.

True

About how long does it normally take a new salon to begin operating a full capacity?

about 6 months.

It is important to answer the phone _____.

by the second ring.

The appointment book may be an actual book that sits atop the reception desk, or it may be a _________ appointment book.

computerized.

Booth rental is a desirable siutation for ____?

cosmetologists who have large, steady clinetele and who do not have to rely on the salon's general clientele to keep busy..

How is a mission statement different from a vision statement?

A mission statement is 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. Vision statement is a long-term picture of what thte business is to become and what it will look like when it gets there..

It is important that all franchise locations: a. are run the same way b. Carry different products c. look differently

A. are run the same way.

What kind of laws must be complied with when you open a salon?

Business licenses, permits, zoning and business inspections. must comply with federal occupational safety and health administration guidelines. OSHA requirments, hiring and firing, payment of benefits, contributions to employee entitlements.

A(n) ______ is a written description of your business as you see it today and as you foresee it in the next 5 years.

Business plan.

Proper ______ are necessary to meet the needs of local, state, and federal laws regarding taxes and employees.

Business records.

You may call on the services of a(n)_______ to help you gather accurate financial infomration.

Certified public accountant.

Describe a business that is owned by a sole proprietor.

Is the individual owner and most often the manager of the business who: 1. Determines policies and has the last say in decision making 2. Assumes expenses, receives profits, and hears all losses..

When planning a salon's layout, maximum _______ should be the primary concern.

Efficiency.

________ include rent, utilities, insurance, salaries, advertising, equipment, and repairs.

Expenses.

T or F. It is not possible to learn how to manage other people; this is a skill that must come naturally to a manager.

False

T or F. A business plan is legally binding once you have signed it.

False.

T or F. Choosing to run a franchise will guarantee you are successful.

False.

______ is classified as receipts from service and retail sales.

Income.

What is meant by area demographics?

Information about a specific population, including data on race, age, income, and educational attainment.

You must also comply with federal _______________ guidelines to ensure you are operating your salon in compliance with safety regulations.

Occupational safety and health Administration..

As a booth renter, you will not enjoy the same benefits as an employee of a salon would, such as __________.

Paid days off or vacation time..

______ help establish the net worth of a business at the end of the year.

Purchase records

The best salons employ professional ______ to handle the job of scheduling appointments and greeting clients.

Receptionists.

The tone of your voice must be ___ and ______.

Sympathetic and reassuring.

A major part of the salon business is handled over the _________.

Telephone.

What portion of the business timeline is devoted to tending to business, its clientele, and its employees?

Years 2 to 5.

What is advertising?

includes all activities that promote the salon favorable, from newspaper ads to radio spots to charity events that the salon participates.

The retail area in an upscale salon should be spacious, ________, and well lit.

inviting

What is a franchise?

is a form of business organization in which a firm that is already successful enters into a continuing contractual relationship with other businesses operating under the franchisor's trade name in exchange for a fee.

What is a vision statement?

is a long-term picture of what the business is to become and what it will look like when it gets there..

Describe a business owned by a corporation.

is an ownership structure controlled by one or more stockholders. .

As a business operator, you must always know where your rmoney ____________.

is being spent..

How can you ensure that you will stay in business and have a prosperous salon?

is to take excellent care of your clients. .

Incoming phone calls are the ______ of the salon.

lifeline.

The reception area should be ____________.

needs to be attractive, appealing and comfortable

The receptionist should be ___________.

pleasant, greet each client with a smile and address each client by name.

A good way to keep track of service records or client cards is by using a(n) ______.

salon-specific software program.

when handling complaints over the phone, how should you respond?

self-control, tact, and courtesy, no matter how trying the circumstances..

If you plan to include a spa as part of your business, the spa area should be ______ from the service area.

seperate.