Every hairdresser has been there; thinking seriously about opening their own salon.

If you’ve watched or read my other videos or you have really paid attention to the salon business and what ownership really looks like, you will have learned that for the most part it’s not worth it. The headaches, staffing, competition, profit margins and life cycle of a trend and fashion driven business, and the fact that generally you can’t sell a hair salon, make it a pretty poor choice for an investment and most owners will tell you that they wish they hadn’t done it. My advice has always been to buy real estate instead and work for someone else and enjoy your time off.
You can’t put a price tag on leaving work at work.

But for those of you who insist, I’ll let you in on one of the main things I’ve observed: Most salon owners spend too much money on their build-out, have an optimistic outlook, and do not factor in real operating costs. This is the fastest way to go broke and become an industry statistic. Just because you build it doesn’t mean they will come.

For so many, the life cycle looks like this:
1. Find a space that is too big for your actual needs.

2. Spend way too much money building it out but then you cheap out on things like water tank size and number of wash basins because you spent your budget on custom cabinets, a chandelier, and beautiful tile floors.

3. One of the people that had committed to working with you and bringing her big clientele is no longer returning your calls.

4. You go in to your first day feeling good about your future but having a little stress about the finances. You didn’t realize what an intro retail and colour order would cost you, and your contractor ended up charging you a lot more than you intended. You just got a surprise bill for another $20K

5. You are the only one doing any hair at any given time. You don’t have the time to mentor the younger staff, who are costing you a lot of money just by being there, and you are stressing because the phone isn’t ringing for anyone but you.

6. You learn that nobody cares as much about your salon as you do. Colour stains are appearing, and in places that don’t make any sense.

7. You realize that you don’t know how to make other people inspired or busy.

8. Groupon calls you. You take the call and unknowingly you start to hammer the nails into the coffin.

9. You close your business.

10. I, or someone like me walks in to your salon; your pride and joy, your dream, and I benefit from your work and investment.

My company is now on our third salon takeover in the city  we are currently expanding in to. The first one the location was not giving us the benefit of a walk-in clientele that should have been associated with the rent, so we moved to another location, smaller, way nicer and cheaper. Now we are ready to expand into something much much larger. All three of these businesses failed for the same reasons, and we have been able to open nice new salons for very little investment.

Most people build their dream and then immediately have to start lowering standards in order to bring people in to help support their salon. Slowly the dream becomes a nightmare because the groundwork and foundation needed to build a true company was never really put in place

How can you avoid this trap? Well, if you insist on opening a new salon, consider starting much smaller so you can avoid the immediate pressure of trying to pay off debt. The salon business is generally not profitable, and paying off debt or trying to recoup your life savings in a hair salon will take you YEARS, if it happens at all. An acquaintance of mine just celebrated her salon debt being paid off after 5 years. She is a rare case, and I promise you that she sacrificed far more than most can imagine.

My business started as a 2 chair salon, then became a 4 chair salon, then a 12 chair salon, then a second and then third location. The only way we were able to become who we are was by starting small and creating the systems so that when we were able to expand we already had a clear vision of expectations and were working towards creating culture. And because our bank accounts grew as we did, we never had a penny of debt outside of the initial $10K loan, which was paid off after 2 years.

Of course this is not always the case, plenty of people can attest to achieving success with a large and expensive build-out. But for most of us, starting small allows for a lot of trial and error without capital investment and stress. Not everyone should own a salon. In fact, 80% of current salon owners probably shouldn’t be in the business at all. A business is a lot more than just a nice room, and starting small can help you figure out who you really are and where you really want to go.

Please check out this video showing our latest salon location, built-out by someone else.