Article by Alyssa Federico
Which business model is best for the customer?
In the beauty industry, the two leading business models adopted by salons are Commission and Booth Rental. Under the Commission model, a salon owner typically hires multiple cosmetologists and pays a commission to each for work completed. The Booth Rental model is a single cosmetologist renting space in a salon and operating as an independent business. This article examines the pros and cons of each model and attempts to reveal the optimum choice for the customer.
I started my career in 1994 as an independent business person renting booth space, and now as owner of Studio Bliss, I endorse the commission model. I have a degree in Business Administration with 20+ years industry experience spanning both models.
Let’s begin by exploring the booth rental environment. The space may look like a regular salon, but in fact, it is made up of several small businesses. The landlord has attracted these independent cosmetologists by offering space and the use of basic equipment at an affordable price. The appeal of owning your own business can be strong. At first glance, booth rental sounds like a simple, easy way to get into the salon business without substantial capital expenditure.
Now, let’s dig a little deeper. As the customer, ask yourself what could go wrong with this scenario? Many new to the profession have recently received their cosmetology license but have no training or experience in business management, accounting, sales, marketing, etc. Historically, there is a high failure rate for new businesses. If you are looking for a stable long term relationship with your cosmetologist, this may not be your best choice.
Other issues could include inadequate space for retail product display and storage. It is in the landlord’s best interest to offer a booth with a minimum square foot area, as this enables the sale of more units. Insufficient space will restrict the offering of a full range of products. Also, carrying a full-color line of hair products is expensive. Can the new cosmetologist afford to do so? Ask yourself, am I getting the best products for me or simply something available on the limited shelf space. How can I get the best color mix if there are gaps in the color-line?
It won’t take long before you notice other deficiencies. Your cosmetologist must interrupt her work to answer the phone and schedule another appointment. There is no support if running behind, so expect to be delayed. Sick or vacation days mean you are forced to reschedule as there are no backup options. Hidden effects include the stress on the cosmetologist caused by countless business demands. It’s hard to be an artist when you're worried about paying the rent. Cosmetology schools don’t teach how to run a small business, so many are surprised by the complexity.
With a staff of one, there is no opportunity for cross-training, and the social aspect of a salon visit is non-existent because of the inherent isolation of each booth. Additionally, product vendors offer training in their product lines. The single operator business size may impede product vendor training. It is not only more efficient to train several people at once, but the monetary return from a larger salon helps offset the training costs. Inevitably, lack of continuing education will result in stale techniques.
Twenty-four years in the beauty industry taught me the commission model offers the customer the most benefits. The model’s superiority stems from business size and a team approach. Let me explain.
As an owner, I set the bar high regarding customer satisfaction. I started with the selection of a building in a clean, safe neighborhood. If a customer is uncomfortable with your salon location, no real estate bargain is justifiable. Of course, ample free parking is a necessity and being near an area where customers frequent, such as restaurants and shopping, is a bonus.
Today you can find many beauty product lines in stores like Walmart, Target or most pharmacies. Check out the display case at Studio Bliss. You’ll find premium brands or professional product lines not available in mainstream stores. As a customer, you should expect no less from your salon. I cite this as an example to illustrate why size can make a difference. An individual in a booth rental situation would be hard pressed to find both retail and inventory space to carry the same selection and depth of product offerings.
Décor is a subtle ingredient that also contributes to overall customer satisfaction. As the salon owner, I designed the interior to match my clients. There is a comfortable waiting area stocked with beverages. Free Wifi is in place. The styling chairs, manicure tables, pedicure recliners, and shampoo stations were all carefully selected and positioned for client comfort as well as utility.
Without a doubt, the most crucial element in crafting an exceptional client experience is the team placed at the disposal of the client. The team concept is the distinguishing feature between a commissioned salon and an individual with a booth rental.
Wikipedia defines a team as a group of individuals working together to achieve a goal. Teams normally have members with complementary skills and generate synergy through a coordinated effort which allows each member to maximize their strengths and minimize their weaknesses.
The Studio Bliss team conforms to this definition. Management focus is on strengthening the team through training, coaching, and support.
- Training takes three forms. First is cross-training where individual staff specialists take time to instruct other staff members in their specialty. Because the support staff is a recipient of this training, they are able to grow their skills and migrate to a higher position. The second form is when a vendor visits the salon to provide product-specific training. A side benefit of offering premier products is a superior level of training. Finally, the National Beauty Shows represent the apex of professional education. At these shows, internationally renowned artists demonstrate their techniques and showcase the leading edge fashion. It is difficult to return from one of these shows without being excited about a 100 new ideas to share with your clients.
- Coaching involves observation of team members at work, suggesting improvements to techniques, or providing tips for better customer relations. Supplemental instruction is offered when needed.
- Support includes facilities, equipment, computers, software, product research, etc. Providing this support enables the team to focus on the customer. The ability for one stylist to confer with another stylist regarding something like a color formula, adds to your benefit.
Only with a team are events like bridal parties or spa parties possible. Naturally, the facilities must be of adequate size to accommodate the occasion. A team also brings a depth of service not easily matched by an individual including hair styling and color, hair treatment, manicures, pedicures, acrylics, massage, makeup, spray tanning, waxing, microblading, hair extensions and more.
Inherent in the team concept is depth of staff. In the event, your primary stylist is unavailable (sickness, family matters, etc.) alternative staff can keep your appointment, you’re not left high and dry for that significant event or trip.
Teams are comprised not only of professionals but also support staff. From a welcoming receptionist that offers a beverage, to shampoo and blow dry apprentices, you will appreciate the added touches support staff can provide.
You, the customer, are the principal reason for this article. Hopefully, by explaining industry fundamentals, I have enabled you to make an informed choice. If you still have a question, give me a call, and I’ll do my best to provide an answer.