Blueprint For Success: How to Expand Your Salon Business
Lisa Walt and her husband Larry have used the technician-manager partnerships to their advantage within their four Design 1 Salon Spa locations in Grand Rapids, Michigan--Lisa continues to see clients as a stylists while Larry focuses on the management of the business.Photo 2 of 7
As part of their expansion, the Walts were determined to own their own real estate, renting 25 percent of it back to their salons, and the rest to other businesses. "The advantage is the flexibility in that expenditure," Larry Walt says. "I can lower the salon's rent if I have to."Photo 3 of 7
Within the Salon 124 brand, Genesis caters to mid-market consumer by staffing recent graduates from the salons academy and a smaller square footage per chair, while the Salon 124 flagship caters to a higher-end consumer.Photo 4 of 7
To successfully grow three Salon Pyure locations in Boynton Beach, Florida, owners Lucia Boccia and Elan Levy developed strong management systems that could be duplicated and repeated with each new salon launch.Photo 5 of 7
Tom Kuhn, Qnity and 2 to 10 ProjectPhoto 6 of 7
IN THE EARLY 1990s, Brian Perdue was observing a disconnect. Working in an upscale salon in the Atlanta market, Perdue’s wife Karen had been filling her book right from the start. To Brian Perdue, that indicated a demand for upscale salon services. And yet, no one was repeating that formula for success. At the library, Perdue found a book listing beauty franchises for sale, but they all tended to target only children or the budget segment. Furthermore, Perdue wasn’t impressed with the competition in his market—all he saw was under-capitalized salons with inconsistent procedures and unremarkable facilities.
“From an entrepreneurial standpoint, you try to identify what people are looking for but struggling to find,” Perdue says. If an upscale salon operation with multiple locations fits that description, Perdue was ready to oblige. He went to cosmetology school to learn the technical end of the industry, and together, the couple purchased the salon in which Karen worked.
Today, the couple owns three Salon 124 locations and a school. Brian Perdue says that he caught an early wave in the sea of change that has become part of the salon industry’s current, more professional landscape. The norm used to be that top hairdressers would open their own single-location, high-end salon where they would work and hire a few other stylists. Today, whether the owners are hairdressers or not, they’re primarily businesspeople—and businesspeople grow by expanding their business.
“Instead of owners who’ve learned how to work well in their business, today’s owners are people who’ve learned to work well on their business,” Perdue says. “They’ve become so good at it that they’re opening up their second and third locations. They’re putting systems in place—recruiting, programs, education, marketing—that they can carry over.”
And yet that library book Perdue consulted in the pre-internet age still applies: while the upscale sector now sees multiple-salon businesses, the franchise category does not. Perdue believes that’s because there’s nothing turnkey about upscale staffing. “A high-end salon needs very talented, experienced hair stylists, but developing that level of hair styling staff is a process,” Perdue observes. “That’s not compatible with the franchise model.”
The Makings of a Leader
Perdue’s concept of working on rather than just in your business is borrowed from a book he and other business owners find insightful, The E Myth: Why Most Businesses Don’t Work and What to Do About It. Author Michael Gerber observes that, as the owner, you’re likely a blend of three personality types:
Entrepreneur: You were excited to launch your business, and you continue to have a vision.
Manager: You’re smart enough to implement and monitor systems that organize everyday tasks such as payroll, training and customer service.
Technician: You opened your business because you love what you do and wanted to do it on your own terms.
Only by calling upon all three personality components, while simultaneously keeping them in balance, can an owner succeed, maintains Gerber. Perdue believes that 60 percent of salon owners lean toward technician-dominant personalities, which may work in a single-location business. But how can you be the star stylist at three or four salons? If you’re looking to expand your business by launching a second or third location, advises Perdue, gather the three sides of your business personality and start working on your first salon.
What if you want to work on it and in it? You have a better shot at doing that if there are two of you. The Perdues demonstrate the frequently successful partnership that pairs a gifted hair dresser with a management sharpshooter.
Lisa and Larry Walt also have used the technician-manager partnership to their advantage. Owners of four Design 1 Salon Spa locations in Grand Rapids, Michigan, the duo thrives on the division of labor. Hair stylist Lisa is still able to take clients, because husband Larry closely monitors the finances.
Is One the Loneliest Number?
The Walts did not set out to be multiple salon owners; they launched a second location reactively, not proactively.
“We suffered a mass walkout in our first location,” Larry Walt explains. “When we recovered, we thought that if we were going to stay in the business, we’d better diversify. With two salons and higher staff numbers, a walkout wouldn’t have as large an impact.” The second location led to a third and then a fourth.
Diversification wasn’t the only lesson the Walts took from their walkout experience. From that point on, they included the staff in the workings of the business. “We got our staff more invested in our policies, and we opened our books to them,” recalls Walt, who now employs a staff of 170. “Now they understand the business in the bigger picture, and that knowledge gives them a feeling of power.”
Walt finds that marketing strategies are no more difficult with multiple locations. “If I run a promotion, it’s a promotion for four stores, not one,” he notes. Furthermore, the demands of a multiple-salon business make you sharper. You have no choice but to stay on your toes.
“In a single location, it may take six months to realize that you’re not doing so well,” Walt explains. “With multiple salons, you’re watching your numbers so closely that you know immediately. You’re responsible for so many livelihoods; you tend to make tougher decisions, because they affect more people.”
In fact, Walt maintains that it actually can be easier to run four salons than one. How is that possible? When you have four salons, you’re forced to loosen your micromanagement grip. Good managers and proven systems free your time and diminish your stress, even as you’re multiplying your presence.
Essential component #1: Leadership
“In our study last year, the number one thing that kept multi-salon owners up at night was their managers,” reports Tom Kuhn, founder of Minneapolis-based Qnity, a beauty industry education company that gathers and shares information on multiple-location salon ownership conducted through its 2 to 10 Project (2to10project.com). “One reason the multi-location model is so different from the typical salon is that you move from having a single location leader to being much more dependent on other people.”
Lisa and Tony Fiorentino identified a unique way to find quality managers to hire. The owners of five Hello Gorgeous salons in New Jersey and another example of the married, technician-manager partnership, the Fiorentinos switched up their business landscape early and often. In their first three years, they enlarged their original salon, added two more and then merged two into one very large salon. At the 10-year mark, they went on a hunting expedition.
“In our market, we found several salon owners who were losing money or barely breaking even,” Tony Fiorentino recalls about his early buyouts. “We’ve taken over 21 salon owners as part of our company. Most are managers for us; we call ourselves a ‘team of owners.’ If you’ve been an owner, you know some things that can’t be taught. They’ve brought that sense of accountability to the table. With all of our locations, I can’t be everywhere.”
Spreading themselves too thin is a concern echoed by other owners. “The first additional salon is the biggest step you’ll take,” says Perdue, “because you start to divide your time. You can’t be in two places at once, so it’s about developing and training successful leaders while you’re still in your first location.”
Behind the scenes is where owners should be devoting their time in order to grow the business, maintains Luca Boccia, co-owner of three Pyure Salon locations in Boynton Beach, Florida. You’re at the top rung of the ladder, responsible for mapping out the vision and overseeing the spreadsheet. As leader of the leaders, you’re bringing together your salon managers regularly for goal setting, workshops, retreats and status checks.”
Boccia and his partner, Elan Levy, each owned a single salon before joining forces to create something bigger together. Becoming accustomed to a “desk job” hasn’t been easy.
“I love doing hair, but I want to help the team to be the busiest they can be,” Boccia says. “That’s what got me to give up doing hair. Elan took longer, but finally decided that his mind was on the company, so he wasn’t properly servicing his clientele. When an owner wants to keep some clients, I advise designating entire days each week to really devote to being a hairdresser.”
Regardless of whether you choose to work on clients, don’t be a stranger at your own salons, the experts advise. Stop by and say hello. “Never lose visibility,” cautions Kuhn. “Even short walk-throughs to show your face is so critical. “Salon professionals tend to be visual people, and that includes actually seeing the head of the food chain. Structure it so that you’re regularly in different locations on different days, find other reasons to connect as well and don’t be totally predictable.”
Essential component #2: Systems
The second salon you open marks a turning point, but according to Kuhn the “tipping point” comes at four salons. “With four, you’re really a multi-location operator,” Kuhn observes. “An owner of three salons, all close in proximity, may be able to work the business as a really large single location. When you go to four, you need infrastructure.”
That infrastructure will involve both in-house processes and outsourced assistance. Putting systems in place gives you a solid foundation to apply to your new location.
“If you ever find yourself asking why your staffers aren’t doing something, it means you’re doing too much yourself and your systems are not working,” says Perdue. “We keep a list of things done daily and weekly—even monthly, like changing the air conditioning filter—and we check off everything. If something slips through, the first thing I do is consult the checklist. If it’s not on there, we add it. If it is on the checklist but did not get completed, then my leader didn’t hold someone accountable. It’s as simple as that.”
The multi-salon structure only magnifies the importance of systems.“It’s not just about opening another salon,” says Boccia. “It’s duplicating all the amazing things you did in salon one.”
Typically, a salon’s systems include:
RECRUITING, HIRING, TRAINING. If your initial location is successful, it’s likely that you’re already attracting top talent by offering them a rigorous training or apprenticeship program. The larger you grow, the more appealing it becomes to extend your education department to include a full cosmetology school in order to supply an ongoing supply of staff that you’ve trained from the beginning. A school also enables you to build consistency into your service, and that consistency is critical when you’re expanding to multiple salons.
“That’s what the consumer is looking for—style consistency,” says Perdue. “In 2004, we had three locations and there were always 30 to 40 stylists in our training program. With a full-time educational director and 800 square feet set aside as a training area, we were spending so much money that we thought if all we could do is just break even on a school it would make more sense.”
Now Perdue acquires nearly all of his staff from his own school, but that accounts for only a quarter of the school’s graduates. “We have great relationships with other salon owners and place our students with what you might consider our competition!” Perdue jokes.
Even with an educational funnel generating a stream of new stylists, when you open another location you suddenly need an entire staff. At Hello Gorgeous, the Fiorentinos select people from the original locations to place into each subsequent location, and then build up the original locations again.
“That way, you can repeat the first salon’s vibe, which you can’t do with all new people,” says Fiorentino. “We guarantee the transferred staff they will make as much as they were making in the previous location until they build their book again. Our people are really good at what they do; so they’ll often do even better at the new location because they’re willing to raise their prices for a fresh clientele, which they were reluctant to do with their longtime clients. They also help to train the new people at the location.”
BOOKING. Another system hitting the tipping point at about four salons, booking is more likely to be relegated to a call center as a salon organization grows.
“While a call center is not worth it for one or two locations, it’s great not to have all of those phones ringing in the salon,” says Fiorentino, whose call center operates out of the corporate offices. “And you don’t have service providers stopping what they’re doing to talk to the caller, which backs everybody up. I’d estimate that our booking time has been cut in half because the client can no longer get the service provider on the phone. It’s important to install your call center somewhere other than in one of the salons, because that location will likely get booking preference.”
MARKETING. In a single-location salon, the rule of thumb is that it costs much less to retain clients than to find new ones. While retention is important in a multi-salon operation, too, constantly growing staff numbers make client recruitment an ongoing necessity.
“You need a good marketing program that will constantly drive new guests to your new people,” says Boccia, who centers his strategy on three cards: stylists’ business cards offering half-off a cut or color; referral cards that reward clients and the new guests they send in; and teacher program cards, which show appreciation to the community’s school employees by offering them a 50 percent discount on their first visit and a lifetime discount of 15 percent.
Whereas that type of promotional program can be done in-house, traditional advertising for a multi-salon business tends to require agency help. At Design 1, budget for advertising, marketing and social media is roughly $250,000, about 2.5 percent of gross sales.“We use Demand Force, which integrates with our Millennium software, to stay in touch with clients through texting, mass mailings and so forth,” says Walt. “We also still do radio, print and lots of TV advertising.”
ACCOUNTING, LEGAL WORK AND HUMAN RESOURCES. Payroll is done in-house at Hello Gorgeous, while general accounting is outsourced, says Fiorentino. “We use six or seven attorneys,” he notes. “If we had only one location, we’d probably need only one lawyer. Our business is more complex.”
Some aspects of infrastructure inspire the opposite rationale—that if you’re large enough, you can justify employing an in-house department.
“We tried having human resources in-house, but then we outsourced it to make sure we were meeting all the regulations,” says Boccia. “But if I had to do it over again, I would have brought HR in-house before opening our third salon. Then, we’d have someone on staff to provide answers.”
That was Walt’s thinking when, after opening his second location, he hired an onsite CPA to work 12 to 15 hours a week. “An outside firm does our taxes,” he says, “but our CPA always tracks our numbers, and that’s important. She helps me keep a pulse on what’s going on.”
COMPENSATION. Whether you offer a straight commission, a complex salary structure or some hybrid of the two, the steps to increasing income must be clear and applicable across the board. How you compensate employees should not change from location to location, but if staffers at your first salon are discontented with the pay structure, those in the second will not likely be any more enthusiastic.
CUSTOMER SERVICE. Salon 124 not only has multiple locations but multiple price points, with the otherwise high-end company reaching the mid-market consumer through its Genesis Salon, where Perdue starts his new stylists after they graduate from the academy. To make up for the lower pricing structure, Perdue changed his formula for Genesis. For example, he allocated 125 square feet per chair, tightening the space between chairs by one foot.
“As with running an airplane, we produce revenue in the seat,” says Perdue. “If we can put in an extra chair and keep that chair busy, we will increase our profitability.”
While tighter quarters can impact the client experience, the general customer service approach need not vary.
SPACE. In some multi-location operations, the salons are nearly identical. “We have a model we work from,” says Perdue, who streamlines his business by offering only hair services. “We divide our square footage by 150 to calculate how many chairs should be in our salon, and that accommodates a waiting area, front desk and retail section, one to two changing rooms, two restrooms, a shampoo area equipped with one shampoo bowl for every three chairs, an open-view color dispensary area and a very small employee break room.”
Conversely, each of the Design 1 salons has a unique layout. Nevertheless, says Walt, the experience is uniform.“We maintain consistency through our services and product line,” Walt says. “If a client goes from one salon to another, she’ll receive the same high quality service and encounter the same products.”
CULTURE. The foundation for everything you do, your culture is perhaps the most imperative aspect of your business to systemize as you multiply. It also may be the most difficult.
“You need clear communication processes to direct your managers so you’re all on the same page,” Boccia recommends. “If each of three salons managers decides to do just one little thing differently, pretty soon you’ll have three businesses with three different cultures.”
Perdue agrees. Before you can consider opening a second salon, he says, make sure you have a strong identity at your first salon.
“Think of Apple, Starbucks or Disney,” Perdue says. “If your team continues to define your culture when you’re not there, you can move on to another salon. Conversely, if you don’t have a strong culture, your team will create your culture.”