{"id":1469,"date":"2021-03-15T00:00:00","date_gmt":"2021-03-15T00:00:00","guid":{"rendered":"https:\/\/www.daysmart.com\/salon\/uncategorized\/booth-rental-salon\/"},"modified":"2024-12-23T18:07:15","modified_gmt":"2024-12-23T18:07:15","slug":"booth-rental-salon","status":"publish","type":"post","link":"https:\/\/www.daysmart.com\/salon\/blog\/booth-rental-salon\/","title":{"rendered":"Booth Rental Salon Profit Planning: Landlord vs. Commission"},"content":{"rendered":"
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It\u2019s an age-old question. As a salon owner, is it better to be a landlord and offer booth rental or have employees who earn commission? As you may know, there are pros and cons to both sides, and there\u2019s no \u201cright\u201d answer. Running a business is never easy, so let\u2019s take a look at the two different business models from a young stylist\u2019s perspective. <\/span><\/p>\n\n\n

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A tale of two stylists. <\/span><\/h3>\n\n\n\n

Cate and Nicole are both talented stylists. They\u2019re both young, hardworking, ambitious, and eager to learn. Both took roles as stylists with local hair salons right out of cosmetology school. <\/span><\/p>\n\n\n

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\"salon<\/figure>\n\n\n
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Cate started as an hourly paid assistant stylist. She had access to in-house education, and as she passed specific courses, she could take her own clients and gain more experience. She worked hard to please her clients, but the salon took care of everything else. <\/span>However, circumstances change, and sometimes people have to make hard decisions. For example, if such a job pays minimum wage and the stylist commutes an hour each way, she needs other support at home to make it work if something upends the balance, she may need to make different choices. <\/span><\/p>\n\n\n\n

One of those choices could be <\/span>booth rental <\/span><\/a>at a salon closer to home. <\/span><\/p>\n\n\n\n

After all, the stylists they know who rent a booth have more freedom and flexibility. They can set their own schedules, use whatever products they like, and wear what they want. From Cate and Nicole\u2019s vantage point, the stylists who rent booths keep more of their money too. <\/span><\/p>\n\n\n\n

But is it all a bed of roses? <\/span><\/p>\n\n\n\n

Nicole started asking around. She reached out to stylists she knew who made a move to booth rental, and what she learned was eye-opening. <\/span><\/p>\n\n\n

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Is it Better to Rent a Booth or Stay a Salaried Stylist? <\/b><\/h2>\n\n\n\n

Nicole appreciated the training opportunities at her salon, but she had always thought she\u2019d go on her own at some point. She saw herself renting her own chair and setting her own hours. <\/span><\/p>\n\n\n\n

If you\u2019re a salon owner, this is a familiar scenario.<\/span><\/p>\n\n\n

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\"Ask<\/span><\/p>\n\n\n

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According to Andrea Miller, stylist, salon owner, and Business Development Associate at DaySmart Software, recent cosmetology graduates benefit from taking a commission-based stylist role. She says, \u201cIt takes time to build a clientele. Plus, the salon usually offers on-going education opportunities.\u201d In other words, recent graduates receive paid on-the-job training.<\/span><\/p>\n\n\n\n

Andrea Miller says, \u201cI started as an hourly assistant at a salon with lots of in-house training. We had to pass certain courses to move into working with clients and taking on more responsibility. I was able to learn and attract the right type of clientele for my personality. It had the potential to grow to a six-figure job after many years.\u201d<\/span><\/p>\n\n\n\n

She also says, \u201c<\/span>The main things that allow new graduates to be successful in their first year are their drive to work hard, drive to gain exposure through marketing and networking, learn more, and show up for any appointments no matter the time on their books.\u201d<\/span><\/p>\n\n\n

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\"Booth<\/figure>\n\n\n
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Fortunately, for employee-based salon owners who want to attract new talent, there\u2019s good news. Today\u2019s cosmetology students recognize the advantages of working in an established salon. <\/span><\/p>\n\n\n\n

The<\/span> 2020 Beauty Industry Workforce Report<\/span><\/a> published by Talentmatch.biz found \u201c69% of students want to work for a salon right after graduation.\u201d However, keeping those stylists is a problem within the industry. The report also found, \u201c71% of the survey respondents want to rent a booth after working in a salon.\u201d <\/span><\/p>\n\n\n\n

Stefanie Fox Jackson, the owner of Talentmatch.biz, who published the Workforce report, says, \u201c94% of salon owners say they struggle to find and retain talented stylists.\u201d <\/span><\/p>\n\n\n\n

So, where is the disconnect? Why do 69% want to start in a salon but plan to move to booth rental later? And they have this plan while still in school, so why does booth rental look so appealing without any experience?<\/span><\/p>\n\n\n\n

Let\u2019s return to our fictional stylists Cate and Nicole. These women have both built up a good clientele, and they\u2019re starting to consider other options. <\/span><\/p>\n\n\n\n

Nicole is frustrated by her salon. She has little control over her schedule and spends most of her nights and weekends there. This schedule leaves her little time for family and friends. Plus, she\u2019s thinking of starting a family, so flexibility is essential. Besides that, she doesn\u2019t receive as much commission on the services she sells as she was initially promised. Overall, she feels underpaid and unappreciated. <\/span><\/p>\n\n\n\n

As a result, she starts researching what\u2019s involved with booth rentals. One of her colleagues tells her she needs a loyal clientele who\u2019ll move with her to her new location. If she stays close geographically speaking, it\u2019ll be easier for them to follow her to her new location. <\/span><\/p>\n\n\n\n

She also learned that she needs to set up basic business entities. She\u2019ll need a business license, insurance to buy her own products, pay for her own training and marketing materials. <\/span><\/p>\n\n\n\n

But Nicole\u2019s not daunted by any of this because she\u2019s sure she\u2019ll make a lot more money independently. She learns she\u2019ll probably keep about 50% of what she makes. So if her haircut is $60, she can expect to save $30 after paying for her booth rental and other expenses. <\/span>Like a salaried stylist, her most profitable services will likely be color or commissioned to sell retail products. Of course, she\u2019s reminded she\u2019ll have to buy her inventory on all of those products. <\/span><\/p>\n\n\n

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\"salon<\/figure>\n\n\n
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However, there are other considerations. What if a snowstorm keeps Nicole closed for three days that she didn\u2019t expect? What if she\u2019s sick and there\u2019s no one to cover for her? How will she handle her vacation time? <\/span>Nicole thinks about her salaried stylist position and recognizes that she gets paid even if a client misses their appointment. She receives ongoing education on new products and techniques. She even gets paid time off. <\/span><\/p>\n\n\n\n

She learns the average hair salon makes anywhere from 0- 9% profit, which is a big swing. Thanks to her investigation skills, she now recognizes some of the overhead that the salon owner invests in the salon. <\/span>As a result, she starts looking at her reasons for wanting to go out on her own. Sure, she wants more autonomy, but at the same time, she likes most of her colleagues. She wants to work in a place where she feels the staff cares about one another and has a helpful attitude. In other words, she says, she wants to work with people who feel like a family. <\/span><\/p>\n\n\n\n

\u201c36% of respondents to the 2020 Beauty Industry Report said they want to work with \u201ca team that feels like a family.\u201d <\/span><\/p>\n\n\n\n

However, she also wants flexibility. Andrea Miller says, \u201cThe biggest reason I believe people choose booth rental is for flexibility. They can have the option not to work certain evenings and maybe even eliminate weekends. That\u2019s not an option as an employee.\u201d <\/span><\/p>\n\n\n\n

When you combine that desire for flexibility with sometimes a disappointing first year\u2019s earnings, booth rental can look very appealing. <\/span><\/p>\n\n\n

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\"salon<\/figure>\n\n\n
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The Salon Owner\u2019s Perspective <\/b><\/h2>\n\n\n\n

As a salon owner, you might consider the two business models yourself. Is it better to be a landlord and rent booths to promising stylists, or do you want to build a brand and grow a talented team? <\/span><\/p>\n\n\n\n

With the booth rental model, you\u2019re a specialty landlord. The stylists are free agents who pay rent and manage their own clientele. Your profit is based on how many chairs you have and the market rate for hair care in your area. If you have business-minded stylists who bring in a steady stream of clients and pay their rent on time, it can work for everyone. <\/span><\/p>\n\n\n\n

However, the downside is there\u2019s no shared culture or standards. Stylists wear what they want, use the products they want, and if they don\u2019t keep their skills up-to-date, that\u2019s on them. Yet, customers still see you as the \u201cboss,\u201d and you\u2019re the brunt of complaints from unhappy customers and stylists. <\/span><\/p>\n\n\n\n

Furthermore, every stylist is self-employed. There\u2019s little continuity from one booth to the next. The stylists can treat their clientele the way they want and choose any conversation topics, including contentious topics like politics or religion. The stylists themselves have no control over who they\u2019re next to, so if they find themselves with an off-putting neighbor, there\u2019s not much they can do about it.<\/span><\/p>\n\n\n\n

\"Free<\/a><\/figure>\n\n\n\n

Besides the lack of shared culture, there\u2019s an incentive to keep the booth rental low, so you retain stylists. At times, some of the stylists can form cliques and threaten to leave if you don\u2019t meet certain conditions. <\/span>However, with the employee salon approach, you\u2019re in charge from soup to nuts. This is a good thing when you want to create your own culture and lead a team. You can require your stylists to have specific training, dress a certain way, and uphold protocols. There\u2019s an intention behind everything you do. <\/span><\/p>\n\n\n\n

Running an employee-based salon can be rewarding. It also has the most profit potential. <\/span><\/p>\n\n\n\n

Of course, the employee-based salon also comes with all the responsibilities of leasing or buying a salon space, outfitting it, attracting, training, and retaining talented stylists, maintaining inventory, providing training, marketing, and all the other associated costs with running a salon. <\/span>This brings us back to the salon owner\u2019s complaint that it\u2019s hard to find and retain talent. However, when you think about what your stylists want, it\u2019s easier to think of ways to make the employee model a good fit for everyone. <\/span><\/p>\n\n\n\n

The 2020 Beauty Industry Report says, \u201c89% of stylists would stay at the salon they work at instead of renting if they felt the salon could meet all of their needs.\u201d <\/span><\/p>\n\n\n

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\"salon<\/figure>\n\n\n
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You\u2019ve already seen that flexibility is a big part of why they leave. Stylists also want to work in a place where they feel trusted and appreciated. They also want to have the opportunity to grow. <\/span>Andrea Miller says, \u201c<\/span>stylists will sacrifice things to be at the right place for them. It is really important for salon owners to define their image, stick to it and follow through so that their staff remains loyal.\u201d <\/span><\/p>\n\n\n\n

When the salon owner has a vision and understands how to lead and inspire a team, they can create a place of business that attracts and retains top talent. Another part of today\u2019s leadership is transparency and clear communication. From communicating expectations to compensation, the more open your leadership is, the more your staff will feel comfortable. <\/span><\/p>\n\n\n\n

There\u2019s no one-size-fits-all solution for anyone, and at different points in your career, you may find owning a booth rental salon is a better fit at that time than an employee model. Only you can decide. <\/span><\/p>\n\n\n\n

No matter which salon model you choose, you still need to market, take payments, and manage inventory. Our software can help you manage the business side of your salon. <\/span>Try it free for 14 days.<\/span><\/a><\/p>\n\n\n

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It\u2019s an age-old question. As a salon owner, is it better to be a landlord and offer booth rental or …<\/p>\n","protected":false},"author":2,"featured_media":1468,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-1469","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"yoast_head":"\nDaySmart | Booth Rental Salon Profit Planning<\/title>\n<meta name=\"description\" content=\"Learn how to optimize your salon profits as a salon business owner with booth rentals.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.daysmart.com\/salon\/blog\/booth-rental-salon\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" 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