To Rent or Not To Rent…
This just in from the NCA email inbox:
Q. 
Our salon recently changed to “booth rental” for half the stations (the other half are commissioned employees). The owner was completely against renters until last month - and now some of us are wondering if we should make the switch to renting (here or elsewhere) or stay on commission. The owner offers no employee benefits. We pretty much have to build our own clientele, get no sick or vacation pay and have no insurance. As far as I can tell, no salon in town offers employees benefits. I would like to get some opinions on why I should stay an employee over renting.
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August 2nd, 2008 at 7:21 am
I have rented my space in salons for 20 years with no regrets. I have owned a chair rental salon for the past 10 years and am in the process of building my own 2000 square foot salon. It is really the only way to go if you have an established clientelle especially if you are being offered no perks. The biggest challange on start up is bulding up your inventory of color and supplies. It is a huge cost but in the end well worth it. I can make enough in one week to cover all of my expenses and then the rest is my $$$$. So there is really no limits on the amount of income you can earn. You also need to be aware of filing your own sales taxes but it is very easy to do.
Best of luck to all of you and keep on making the world beautiful!
August 2nd, 2008 at 8:48 am
I have been a salon owner for 29 yaers. My sister and I have included full service spa treatments in the last 8 years. Booth renting may sound attractive however there’s more cost to consider then just inventory and taxes. Those are a givin. In order to keep up with the trends and changing economic envirionment you need to seek out further education on a regular basis. Advertising is costly also. I offer our employees Vacation time with a flexable work schedual and paid further education oppertunities. Team work creates a srong work enviornment. Our employees are paid very well and have no real down time as in some salons. Health benifits are going up and up. More and more empolers are droping coverage or increasing what the staff has to pay. With what I pay my employees for an extra dollar or two an hour they can purchase thier own insurance coverage. Creativity grows when working with other professionals. We like to think of our service as fine dining as apposed to fast food.
August 2nd, 2008 at 9:30 am
I have been a comission employee in the past and the only benefit to that is that you don’t have to do you own bookkeeping you get a paycheck and at the end of the year you file your taxes. Depending on your comission split with the owner of the salon I worked at which was 60%-40% plus 6% off the top of my 60% my employer was recieving 51% off my hard work and long hours with of course no benefits and no comission increase for the 7 years I made her very good money which amounted to way more than I now pay for rent and supplies and my quarterley taxes, and either way you pay for your own benefits no bonuses no insurance no sick pay,no retirement, the only thing you really get is the expeience of knowing that your employee is traveling, buying luxury cars and having a mansion and going on shopping sprees and your contribution with your hard work and you continue to work and live from paycheck to paycheck, I now rent and know that at least all the money I work for minus my rent and expenses is going in my pocket not in an employer that doesn’t appreciate your hard work and dedication in this industry, think about the pros and cons and does your employer really appreciate your dedication and financially would it be beneficial and how much rent is she asking for and would it amout to the commission she is recieving now if you rented and bought your own supplies and paid your own taxes and all other expenses.
August 2nd, 2008 at 12:29 pm
I’ve been a booth renter for about 9 years now.
I see no reason at all to be an employee, allowing a salon owner to take 1/2 or in some cases even more, of every service dollar I bring in.
The only benefit to being an employee is that as a renter, you do have to be diligent in paying your own taxes, etc. Stay on top of it, and you will be fine.
You of course have to pay for your own color and other supplies, but that is nice because you then choose the line that YOU prefer! Not what the owner wants you to use.
I do understand the fear about it as I had it too before I did it, but after 9 years, I would never go back to being an employee.
As a renter, I can say that after supplies and rent, I keep a lot more of my money than an employee.
If I had a $1500 week, as a 50% commissioner, I get $750. As a renter, I took out $250, spent somewhere around $50 in supplies, and the rest is mine. It really is a no brainer!
Good luck!
August 2nd, 2008 at 4:25 pm
How many of us are really cut out to own and manage a business? Not many from my experience and this is the one question most renters (AND SALON OWNERS) do not stop and ask themselves before taking the plunge. Do you have the discipline to be your own boss, set your own hours and pricing, manage your supplies, be responsible for filing your quarterly returns and lots more?
August 2nd, 2008 at 7:11 pm
comm. or rent each has it’s own perks–as a renter now for over 9 yrs., i love it–i look at it as the next best thing to owning a salon–i set my own hours/prices ’nuff said
August 3rd, 2008 at 9:50 am
I have done it all! Salary, booth Rent,(I was never happy with the people I worked around)and now own. When I opened in 1992 I hired Commission people and some booth renters. This was never full filling for me! It was always, back stabbing, drama, stealing others equipment, people coming in late and hours that were never covered. Three years ago I was debating on even staying in the business. My husband and I went to a spa management class, they talked about changing our industry to a great industry like a doctor’s office. (salary with benefits, team work) All the benefits, sick pay, vacation, IRA, health, dental, vision insurance, and bonuses. Supplying the best equipment money could buy (except shears), and only hire people that want to be the best.(The team we have now is phenomenal.) Our spa is almost there now, it has had it’s challenges, but all the systems are in place and we are now building a brand new state of the art 3000.sq ft. facility. We only hire people that want to be the best, and they must understand it takes time.
Most people don’t understand “it takes time”.
Everyone has to pay a price, if your drawing a high commission you will not get benefits, same with booth renters. If your drawing a lower commission, you will get some benefits. if you do not pay your taxes, your going to have trouble buying anything like a house etc.(plus the change of getting caught by the IRS) The thing about commissions, and booth rental is chairs, stations, and shampoo bowls ware out. If there is know money put back for these things they will fall apart, then everyone leaves and wants to go to the place that is the nicest. If you loose your vision tomorrow, or get into an accident and loose a hand, or what if you get cancer will your salon/spa still carry you? We will, we teach, and preach team, and we truly have a great one now! Good luck in your journy, hope I’ve given everyone something to think about! Marlene from: Hair Visions Salon & Spa
August 5th, 2008 at 4:36 pm
I’m a new salon owner and I need help on how do set booth rent. What determines the amount and a sliding scale? Barbers and Stylists
August 7th, 2008 at 9:30 am
Monica, you need to get some good advice on tax law and what qualifies you as an owner to rent vs have employess. The rules are very strict and important to know or you’ll be in big trouble with the IRS. Most make mistakes in that and they can cost you your business. behindthechair.com has good tips on how to do this right. I’d suggest you stsrt there. Is your salon already open with employess?
August 7th, 2008 at 4:00 pm
The decision to rent or work for commission can rest in your personal drive for succes. If you are a go getter and bring in a huge clientele and constantly communicate with clients and network for additional clients, make the most of the rental dollars you pay per month by increasing your revenue per hour and revenue per month base on your work ethic, than rental will maximize your profit! The person who says renting is the next best thing to owning a salon - yes - but owning a salon means overhead, utilities and responsibility for other people besides yourself. Renting can and will be the wave of the future as more beauty professionals realize the value is in their abilities, not the salon - I know I am not making salon owners happy here but there is a happy medium if salon owners and renters work together to make the salon great and profitable for all - its up to you, the choice to get your leads only from the salon, be on commission and wait for business - well, not really a success story there.
Go for it, be the best no matter what method your are paid!
August 23rd, 2008 at 7:19 pm
Renting definitely gives one more incentive to work harder! As for benefits, I can tell you about a product line that allows you to buy directly from the company at wholesale prices and then they also give you a percentage kickback which can then be put into a retirement program just like the big companies do. They also offer free education and low cost seminars to keep you updated in both product knowledge and skills. The products are superior and will NEVER be sold at retail outlets–only through hair stylists. Email me if you want more info!
August 25th, 2008 at 9:40 am
I have been both comm & renter. I think financially it does come close to equalling out to the same after product, rent and taxes…but also you have to remember you need to keep your reciepts and take off many expenses when you do your taxes. The biggest plus is being your own boss!!! That is worth it. In either situation you dont work you dont get paid. I tend to work come in early and stay late as a self employed person…its worth it compared to as commission I stuck to the hours provided. Also, if you want to take a half day because you want to you can…easy as that. In my case I had to beg off for a wedding and a funeral let alone trying to beg off to watch a softball game. Again, either way you dont work you dont get paid. Take the Plunge. your worried about loss of clients … where are they going to go??? Your not moving locations…All you have to say now is, please make your check out to me. And if your brave enough to tell them you prefer cash or check that is benificail too.
August 26th, 2008 at 8:07 am
Naomi,
Can you tell me what that product line is that gives you a kickback? I am very interested also about what kind of retirement investing might be best.
I would love to talk to you. Thanks
September 3rd, 2008 at 12:57 pm
After reading all the responses, one thing is certain - great salon owners will be great whether they use the rental model or the commission model.
I have been studying the material from www.thebeautyresource.com. Andrew is a great resource for spa and salon owners, teaching all the important tools. Owning is a big responsibility but can be very profitable. I have heard of renters paying $800 to $1,000/month in middle markets to a shop that stays at the top of the game and brings in only the best team of professionals, lots of walk in traffic and great products.
As a renter you control your income and make as much as you want by truly marketing yourself.
I am not teaching business skills in the beauty schools - I love it - the students are excited to learn how to manage their money and market themselves. This will be a great help to the industry overall!
September 11th, 2008 at 1:53 am
I want to inform many of you that a few states have already made the booth rental illegal. Unless you have 24 hr access and are free to come and go as you please , watch out. You also are not allowed to be on the books that a common front desk person takes the appointments for you. Consider the fact that the government will get its money and this way leaves too many holes.
In Southern Ca. the trend has changed from booth rental to commission. I have had an influx of rental stylist showing up at my door asking for a space. A good owner invests in the future of the workplace and its staff period.
October 3rd, 2008 at 12:08 pm
Keith , good advice . Most salon owners are misclassifying their workers and will lose an audit . ,I suggest a very good labor law attorney that specializes in contract law .This is a legal issue that can only be answered by a labor law attorney . There are other issues to consider as well . Our profession is being targeted by the State Employment Department and the IRS .The penalties if you lose an audit are devastating . Ignorance of the law is just no excuse . Refer to my article on Independent Contractor Beware
Good Luck
Jon Gonzales
November 21st, 2008 at 3:02 pm
I have a friend who is locked into a chair rental lease. Is this legal and standard procedure? The salon is in violation with the state cosmetology board and she has been losing clientele because of it. She would like to find a way to dissolve the chair rental lease with as little hassle as possible. Any thoughts are helpful. (Btw- I am not in the business, but she has no access to a computer at this time so I said I’d inquire around.) Thank you for any help.
November 29th, 2008 at 3:16 pm
I was a commission stylist for years. A friend of mine opened a booth rental place, and I made the leap. It’s not easy. But oh so worth it if you prefer a little freedom in your life. You have to ask for referals, and customer service is key. In most cases you will no longer have a steady stream of walk-ins. You can however control your own prices, what products you use, what you wear, when you start your day, when you end it. I have tried to go back to commission places since, and have been very unhappy being told what to do, and having to clean someones salon for free. I’ve recently landed a job in a salon suite located in a prestigious all ages apartment complex. My rent? They only take 15%! They also put up flyers for me throughout the complex. I’ll be doing everything I can to hold on to this gig. I think the hairstylists before me who let this oppurtunity go are foolish.
In the end only you can decide if you are willing to put in the time, money, and paperwork to make your business work. I had a friend who rented that waited forever to call her clients back to make appointments. How foolish! Would you take a twenty dollar bill and flush it? In her case, commission is better.
December 3rd, 2008 at 9:02 am
Naomi can you tell me about the product line that I can buy direct. Thanks Cheryl