You’re not too small to fail.
In two weeks, I’ll be in Manhattan at IBS NY teaching the workshop: Salon Fail!: 15 Worst Business Practices Exposed. Yesterday, I received an email from a potential attendee. It read, “I am a booth renter and I’m really interested in this class. Do you think my business might be too small to benefit from it?”
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 independent operators (who I call “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.
If you’ve read my book, then you know that I differentiate independent 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 on-site freelancers.
I’m often contacted by microsalon owners who tell me that other consultants “blew them off” because they were “too small.” (Depriving independent operators of much needed education and guidance is a deplorable practice, but that’s another rage-filled post for another day.)
You are not “too small.” 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 venturing 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. 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. For example, many microsalon owners won’t have the need (or the ability) to make the larger orders from distributors necessary to qualify for bulk discounts. Instead of sharing a professional liability policy with multiple professionals at a discounted rate, microsalon owners have to insure themselves at a higher cost. Microsalon owners don’t have the benefit of having marketing materials or advertising provided to them–this is another critical recurring expense most microsalon owners don’t plan for or budget for.
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. Studios and booths, when broken down per square foot, often end up costing considerably more than is reasonable. For example, a studio in my town charges $800 per month to rent a 110 square foot studio. The owner is paying $1,300 a month for the entire 1,200 square foot building.
The renters are paying $7.27 per square foot each month. The owner is paying $1.08 per square foot. You do the math on that and explain to me why these professionals are signing these leases–because I don’t get it.
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. (How corny are those names? Yeah, I know. It makes me sick too. Sorry about that, lol.)
The lack of support and inability to keep expenses in check can make microsalon significantly harder than traditional salon ownership. Simply put: your capacity to fail is extremely high. No. Your microsalon is not “too small” to benefit from this workshop. Quite the opposite. Your stakes and risks are very real–and numerous.
I’m in the process of writing my column for the April issue of the Stylist. In it, I’ll be going over the high price of independence by sharing an actual cost breakdown from one of my consulting clients who was weighing microsalon ownership against traditional salon ownership. In the meantime, 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 booth renters a big favor by sharing your experience–many of them are in desperate need of a reality check.)
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