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Management Practices

Danny LeClair's Letter to the Industry and the Clients it Serves

Danny LeClair | March 26, 2015 | 9:30 AM
Danny LeClair, co-owner of Studio DNA in Santa Monica, California.

We lost three stylists in our Santa Monica salon recently.

End of day Saturday, they packed a bag and walked out. One took the time to speak to the manager on duty while simultaneously hitting send on an email pre-written to me and my husband/partner. The other stuffed her bag while telling people she was simply cleaning out her locker. The other has not even acknowledged her departure or the seven years she spent with us.

Where did they go? A salon suite that recently opened a quarter of a mile away.

Later that evening, I was granted an opportunity to have a completion conversation with one of the departing stylists. We spent two hours on the phone together. She wanted us to know that she loved us and that she appreciated everything we’ve done for her, but this was a business decision. The salon suites offer her “the flexibility to do clients whenever she wants, avoid being micro-managed regarding her time and the promise of more money.”

When I asked her why she never raised any of these concerns prior to making such a drastic and dramatic move she replied, “I was concerned about your response. I didn’t know if you would throw me out for even thinking about it.”

Sadly, our time together did not convince her of my intentions. This is someone for whom I helped garner her first apartment and negotiated a reduced rate. This is someone who I held weeping after she discovered devastating and tragic news. This is someone who I sent to New York and San Francisco to receive education and fashion show opportunities. Despite our efforts to support her and her dreams, she felt the only way to end her employment was to stuff a bag and walk out at the end of her shift.

In fact, what we contributed to all three of these stylists included baby showers, education opportunities, sponsorship for hair shows and competitions, health insurance, paid time off, the acquisition of a home, providing advances on pay when times were tough, continued in-salon education, coaching.

This is not to say that ‘what we do’ or ‘who we are’ as employers requires reciprocation per se. We do so to fulfill on our mission statement: “To uplift and inspire everyone to their own personal greatness”.

We do so to create culture, community and team.

What is seldom understood by stylists is that for a salon owner what we do is intensely personal. We work with people. We educate and grow talent. We pay it forward because our success rests on the shoulders of so many. So when a stylist stuffs a sack and walks out without so much as a warning or discussion, the impact is very personal. Only later can we process the impact on the business.

Our business and our industry is based on mentorship and apprenticeship. The journey of a stylist, until recently, has always been to get your license, find a salon that provides education and provides for your needs, become successful and then join the development team that pays it forward. This is the team that partners with the salon owners in developing the next generation.

When done well, the salon succeeds and the opportunities for the team that partnered with us on that path get rewarded. Our plan has always been to offer Employee Stock Ownership Plans or to assist our senior stylists in opening their own salon.

Today, the rapid growth of salon suites and booth rental has slowed the progress of this model. In fact, the prevailing advice proffered on comment threads is: “Find a salon, get educated, build your chair and then take your clientele to a rental environment.” Essentially, the advice is to use a salon owner to get what you need and then walk out before rewarding them for their contribution. Who have we become that we not only consider this behavior appropriate BUT we broadcast the advice repeatedly in public forums?

And where are people going?

Salon suites. Up until the last two years, we rarely lost a stylist to a rental salon. The common conversation in the salon was that there was too much to receive in our model. Booth rental was not an overwhelming draw. The salon suites is a different model. So different that they can’t even be compared to what we offer. Salon suites sell the stylist on three primary ideas: be your own boss, have complete flexibility and make more money. Many of these assertions are either inflated or conditional.

The idea that more money can be made lies in a couple of assertions. The stylist experiences receiving all the revenue when paid. Suddenly, their pockets and accounts seem fuller. Then they are faced with the reality of expenses – products, rent, insurance, taxes. In many cases, some of these core expenses are ignored or mitigated. For instance, the EDD has a task force looking at underground economies.

The hair industry is on their radar because it is widely known that income is often sheltered.

In a direct conversation with the owner of a salon suite region, they inferred that many of their stylists are “encouraged to request cash payments” which I could only assume was to shelter a percentage of their revenue.

According to California Department of Consumer Affairs, the average stylist salary is $27,000 per annum and a little over 45% of all stylists report their income as independent contractors who pay rent. The average stylist in our salons earn almost double that number. Considering that salon suites and rental environments boast a greater opportunity to earn money, the discrepancy points to the probability of significant revenue sheltering. Taking the argument that approximately $5,000 in revenue is being sheltered per renter, my calculations show approximately $54 million in revenue every year. This results in underpaying approximately $9 million dollars in taxes and social security every year. And in my estimation, that is conservative.

Who bears the brunt of that responsibility? Commission salon owners. We need to pay on every dime and report every commission in payroll. Right out of the gate, we are at a disadvantage. It is the one area where we could never compete.

Virtually every one of my departing stylists stated flexibility was their number one driving force. “I should be able to do a client at midnight,” one retorted. “If I want to cancel my day and take a day off, I should be able to.”

As business owners, we are subject to guidelines these suites are not. We are in service of our clients.

We bear the responsibility of the work provided by all of our staff. We cater to each and every client we can’t pick and choose because their experience reflects on the brand as a whole – not on the stylist.

We must adhere to the limitations set forth by our lease that are common in small business commercial leases. We have support staff expecting to have work when we schedule them that requires a certain flow in revenue.

Stylists address our ‘concerns’ as though we are being directly punitive of them in some way. Our job is to ensure the experience of the whole and our request is that our staff partner with us in having it be the very best. “I want absolute flexibility” essentially says, “I want to be beholden to no one and I don’t want anyone to hold me accountable to any standard other than my own.”

We see all kinds of clients who tell us horror stories of being stood up by their stylist. Worse yet, we see clients whose hair was damaged and the stylist abdicated responsibility or disappeared.

Of course, this does not represent all renters. There are plenty of responsible, capable and professional stylists renting suites and providing exceptional customer service. And of course, these egregious circumstances will impact the salon suite model eventually possibly leveling the playing field when client’s associate renter’s with substandard service. Unfortunately, long term and irreparable damage to commission salon owners is too high a price to pay waiting for the pendulum to swing back in our favor.

‘Salon Suites’ is a real estate business model. They are commissioned with the sole responsibility of building as many of these big box environments as they can in one region and then fill them. They acquire the space at one rate and then build them out so they can charge 5-8 times the existing rate.

They will employ any marketing and incentive program they can. In doing some research, I discovered that financial incentives are often provided to existing renters to find other renters. The stylists who left our employment six months ago have been actively communicating with my existing staff to convince them to make a move. They extol its benefits and its virtues better than any rental rep.

Once the lease is signed there is no quality oversight, no education and certainly no loyalty. They are meant to fill a space and keep the spaces filled to ensure their profitability. They are not in business to serve or be of service.

The marketing always includes the same points, “Be your own boss, dictate your own hours, keep all of your money and take control of your life.” I have been witness to salon suite reps fostering ill will toward the commission salon owner with prospective tenants. One rep said, “Don’t you hate it when they keep harping on arriving 15 minutes before your shift even if you don’t have a client?” I was standing right there and they knew I was a commission salon owner.

Truthfully, where I get most concerned is in the development of the future of our industry. Most stylists desiring flexibility and greater income is not likely to take on the responsibility of hiring and educating an assistant. That would cost them money and time – two things they left my salon to acquire.

Our model is designed to elevate and develop talent. Our model is designed to maintain quality controls and take responsibility, as owners, when ANYONE in my organization misses the mark. Our model is designed to be a member of our community appealing to other businesses, our clients and the organizations with whom they align. Our model is entirely designed around being of service.

And what about future generations of stylists? How are we preparing the industry long term? In speaking with the directors of many cosmetology schools, they report a growing concern about placing their students in jobs. They are seeing a diminution in opportunity because the primary employer used to be salons where they would be trained and developed into their careers. Today, the trend is that there are fewer salons hiring, renters do not hire anywhere near the same ratio and Blow Dry Bars are left to pick up the slack though they only provide guidance in the art of blowdrying. When interviewing students, they tell us how bleak their prospects are and hopeful they are that we hire them.

As I write this, I can hear the comments, arguments and assignations. “You’re just bitter.” “You’re an old fossil who can’t stand change.” “This is a free market and you can’t stop this movement.” “You’re just upset that something better is replacing you.”

To all of these and more, I don’t disagree.

When the rental model – but more specifically – the salon suite model begins to operate with authenticity and integrity in service of the client, then game on. But the overwhelming evidence suggests that they and the stylists who run for cover in their tiny rooms are simply not and for that reason I write this open letter to my industry and to the clients we serve.

We lost three stylists from our tribe recently. We lost their talent, their inspiration, their contribution and their voices. They went to hole themselves up in a suite, locked away from anyone other than themselves and the clients that choose to visit them.

We live and work as a community not as pockets of individuals. Let’s please remember that.

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