Which is best: owning a booth rental salon or an employment-based salon? From time to time, owners on each side of this fence look at the other scenario and think the grass is greener. The truth is, however, owning a business in today’s world is hard no matter which model you operate. It’s really just a matter of determining which one is right for you. Let’s take a look at both models:
Employment-based Salon. As the owner of either a salary- or commission-based salon, you are in control of your own destiny. You dictate your own culture, your strategic plan, the customer experience and how you market the salon and promote its products and services. But being in control of your own destiny also can be a burden. Today’s owners can’t open up shop and run it the way they did 30 years ago, and expect people today to simply want to be part of it. You have to drive the brand, and set the culture. You have to continue to create opportunity for your people and it’s your job to market and promote the salon, drive the business, and inspire, lead and educate the staff. But as the owner of an employee-based salon, you also have the greatest potential upside from a profitability and growth standpoint.
For the stylist, working in an employment-based salon offers a career path. Someone else takes care of the rent, taxes, purchasing and controlling the inventory, scheduling appointments, and driving customers in the door. In some salons, the product education, advanced training and even healthcare benefits are covered. The stylists can concentrate on creating great hair.
Booth Rental/Landlords. To maximize profitability in a booth rental salon—and let’s make the assumption that both the owner and the employees are paying taxes appropriately—it’s based on chair capacity and how much you can charge per chair in your market. It’s really no different than owning an office building—it’s a real estate transaction. If you can build a group of tenants who are self-starters, are responsible and pay their bills and taxes on time and who can generate their own clientele, it’s a model that can work. The downsides is, even though you are the owner, you really have no control – you can’t dictate when your stylists work, what they wear and what and how they sell retail. There is constant pressure on the business from competitors to keep rent low, and you have to constantly put money into the salon to keep it new and fresh and a place people want to work. And, even though you really have no control over the staff and how well they perform services, you still receive the customer complaints—because as the owner, the public views you as the boss.