Business Strategies for a Licensed Hair Dresser

Business Strategies for a Licensed Hair Dresser

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Business Strategies for a Licensed Hair Dresser


This paper is designed to help every classification of worker in the beauty industry go to the next level of professionalism, legitimacy, and excellence. It is not enough to sharpen your craft and become the best in haircutting, coloring, or nail artistry, and cannot make any money. Due to, not being able to attract customers. The vocational and technical schools for cosmetology, skincare, and makeup are designed to teach the fundamentals of the various trades and prepare us for the state board licensing exams. The curriculum for such programs may only touch on salon management and business planning. So where do all the salon owners, independent contractors, and booth renters receive their training and education about business matters?
I recently did a market analysis of the salons within a 30-mile radius of the salon I currently work in. Since I see a beauty salon on almost every corner during the 30 minute drive from my house to work, I wasn't surprised to learn that there are a lot of salons within the 30 mile radius. Of these salons over 95 % were booth rentals, 4% classified their workers as independent contractors. And less than 1% was employee salons. The average number of operators in each salon was 4. Based on these figures, virtually every one of these operator was an entrepreneur. Less than 1% were actually working for someone else's company, All the rest where working in someone else's establishment. The IRS is paying closer attention to this industry, because stylist is not reporting their income properly. If, they are reporting it at all. How can you issue a W2 for 50,000 for a house and never file your taxes. The IRS and State governments should not have to redefine how we run our operations. Instead, years of ignorance, abuse and neglect have led to booth renting being illegal in some states and the IRS scrutinizing this multi-billion industry, looking for unreported and underreported income and millions in unpaid taxes. This is your wakeup call. Get it together now or lose it all later and owe a lot in taxes. Make your business work for you. There is no reason anyone should not be structuring their business this way. You can make the same salary a doctor makes a year if you run your business right. (Mind Your 2006)
This research paper will also address the level of professionalism and business sense in the beauty industry.

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When I was on the outside looking in, I realized that a lot of the stereotypes, jokes, low regard, and outright drama associated with ethnic hair salons were a direct result of a lack of knowledge.
Finding Your Niche
There are our work classifications that are common in the salon industry: employee, independent contractor, booth renter, and salon owner. The salon owner is understood to be the individual who owns the business entity that allows the employee, independent contractor, and /or booth renter to work in their establishment.
Employees generally work exclusively for another individual or company. This is an ideal setup or the worker who only wants to serve the beauty and grooming needs of customers without the responsibilities of a business. The employee is responsible for wage reporting, tax withholding, federal and state business requirements, marketing, finances, etc. Booth renter's pays rent to the salon owner in exchange for workspace, usually a fully equipped space. A booth renter is a tenant running a small business. Booth renter set their own prices and payment structure, hours, own means of communication, report own income to the IRS, etc. Independent contractors, is also a small business owner who may have a work agreement with one or more salon owners. The individual customers belong to the salon. You are hired on a contractual basis. You are also responsible for reporting your income to the IRS. Salon owner may utilize workers who are employees, booth renters, and/or independent contractors. (Small Business 2006)
Setting Up Your Business
First establish a name for your business. Make sure the name represents the image you want to portray.
Choose your business /ownership structures: Sole proprietorship, General partnership, Limited partnership, Limited Liability Company, C-Corporation, and S-Corporation.
There are several business structures to choose from, but you must pick the most advantageous one for your specific situation. Consult with a Certified Public Accountant (CPA) and or an attorney to help you choose the one that's right or you. And to assist with the necessary documentation that goes to your Secretary of State's Office.
Now is the time to consider a business plan. Key components that should be included are company goals and objectives, company description, ownership and management summary, company history, description of services and or products, market analysis, competition, marketing strategy, personnel plan, break even analysis, income projections for first three to five years, expected and potential expenses, projected profit and loss, and balance sheet.
Secure the appropriate licenses and registration forms. Operator's license if you are an owner-stylist, self employed as an operator in your own business, then you will need an Operator's license from your State Board of Cosmetology. Business license to conduct business anywhere in the US, you need to secure a business license from your local Tax Commissioner's Office or Business License Division. Independent Contractors should have the physical location of their office or home office on their licenses. Shop license are required or salon establishments to secure and post a shop license. You will need to obtain a Federal Employer's Identification Number, State Withholding Number, State Re-sale Identification Number, Department of Labor Number, and Start-Up Capital. You will need communication and office setup, which includes telephones, business cards, appointment book, computer and software, credit and debit card terminal, commercial insurance. Don't ever think about running your business without liability insurance, even if you are an independent operator. (Small Business 20o6)
Business Systems
Booth renters, Independent contractors, and self-employed salon owners who do not have managers are their own salon managers and business managers. Some manager's duties are setting realistic short and long term company goals, hiring staff, developing, training, and motivating staff, ensuring quality customer service, tracking sales and performance, leading and guiding the team to accomplishment of goals, complying with government labor regulations and handling payroll. Good managers have the ability to work well with others, the ability to lead others, and the ability to communicate clearly and effectively.
Marketing involves efforts to reach your target audience. Public relations and advertising are all a part o marketing. When you develop this part of your business system, you are defining your product and services, determining your target audience, devising and implementing ways to supply your target audience with your goods and services, creating a demand for your supply, creating awareness o your company goods, and brand, and creating and conveying a specific image for your company in the minds of the public.
There are several ways or salon owners, independent contractors, and booth renters to market your service and products. Once you determine who you are targeting, choose the method that will most likely reach your desired audience with your message. External marketing is designed to attract new customers. Internal marketing refers to retaining your current customer base. Below are some common external marketing vehicles:
Word of Mouth: You will find that majority of you business
Comes from referrals. Either from customers you served or from people who've seen the results on customers you've served. Your work will always speak or itself. Make sure you always give your clients plenty of business cards. Endeavor to treat your customers old and new with unrivaled customer service in addition to superior product. You never know who's being instrumental in the success or downfall of your business.
Internet: We're in the Information Age. These days, virtually all of your potential customers have not only heard o the internet, but also have access to it. Even if you are a single operator, get a website or your business. Make sure key words that identify your business are encoded on your site's program and picked up by various search engines. This will ensure that your site can be accessed by people who may not know that you exist, let alone know what the exact address is or your site. You want to use keywords like: nail care, pedicure, makeup, haircuts, ethnic hair, relaxers, color, highlights, extensions, weave, facials, and waxing. Only use keywords of services you actually perform. Your website should include information such as: your salon and business name, operator name, company address, phone number, hour's o operation, a list of services and products that you provide, prices, and directions to your location. Having a website shows that you are keeping up with the time. Which will also show potential clients that your skills are competitive and up-to-date? Going the extra mile to feature your salon online definitely set you apart from the typical "mom and pop" operation that salons are so often associated with. It shows that you are innovative and in touch with your market. (Winning Clients 2004)
Media: Small business owners can also take advantage of the media. You can start with radio announcements or inexpensive time slots and press releases highlighting something that is newsworthy about your business. Submitting professional photos of your work or staff to industry-related magazines can also give you a lot of exposure. Focusing on magazines that will reach consumers, such as in grocery stores, beauty supplies, and magazine stands. Remember the purpose of your marketing efforts is to let people know you have a supply or their demand and ultimately increase revenues. So find a good photographer who specializes in headshots and fashion looks. Choose a model that will capture your vision.
Social Networking: Always keep some type of business card or promotional material at arm's length. Put your promotional material on church bulletin, libraries grocery stores, bus stops, any place that gathers a lot o people. Buy ads when asked to promote your business. Do volunteer work or different organizations.
Business Networking: Business networking is taking social networking to another level. I you are targeting the professional. Career-oriented customer, then networking with other business owners can be a great way to increase your client base. Participating in trade shows, exhibitions, job fairs, career days, and merchant's meetings can increase your exposure amongst a more professional population. Doctors, lawyers, other business owners, bankers, and police officer all need beauty services.
Direct Mail: Can be an excellent marketing tool depending on the source gathering the information and the type of list you're using. Some good categories to get listings on are new residents in certain zip codes or people within a specific income range. Direct mail companies sometimes gather new resident information from mortgage companies. The listing for names and addresses of people with certain incomes is gathered from credit reporting bureaus. Make sure information is current and accurate. Make sure promotional material is eye-catching and interesting. Your ultimate goal is to draw that person into your business.
Some common internal marketing vehicles are: special occasion postcards, client appreciation events, and referral bonuses. (Marketing Tactics 2001)
Standards will either draw or drive. People will come to you or leave you because of the standards you have in place. Professionalism is very important, but consistency is the key Standards are no good unless they are upheld. Rules and regulations should be enforced. Follow through with commitments to customers, maintain standard of promptness, no solicitors, No your market and set standards that will keep them coming back. If you say no children unless being serviced, stick to it.
Your hair, makeup, and clothing should be lawless at all times. Remember we are in the business o looking good. You are the best advertisement. So, sell you service or product by selling yourself first. You only have one opportunity to make a first impression.
Invest in yourself, your staff and your company. Continue your education beyond technical and trade school. Spend some o your hard earned money on you and your career. Take time to go out to trade shows, workshops, seminars, and classes. Continuing your education is motivating, enlightening, and fun.
People to always have on hand are an attorney, accountant, financial planner, banker, mentor, and assistant. You may not have all of these people presently in your life but look for them over time.
I you are newly out of cosmetology school, I advise you to work commission for the first two years. Learn all you can without having to spend a lot of money. You do not want to pay booth rent without having customers. Be open to change.
People patronize businesses on which they can depend. When your product is consistently good, people will buy. When your service is consistently good, people will come. An excellent product and service will never be without demand. So always be ready to supply. When you have made your vision plain and clear, structured you business, set and maintained your standards, looked the part, invested in your business, and encouraged yourself to continue on, then you can expect to greatly increase, no matter how small your beginnings may have been. It's time to start being responsible our business.
A lot of the information that was shared was through personal experience and work experiences.


Small Business Administration. (2006). Home Page. Retrieved September 1, 2006, from

Mind Your Own Business. (2006). HOME Page. Retrieved August 15, 2006, from

Perreault D. & McCarthy E. (2004). Basic Marketing. New York: McGraw –Hill Higher Education.

Michman, Ronald. (2000).Marketing to Changing Consumer Markets.
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McCready, Gerald. (2001). Marketing Tactics Master Guide for Small Business. New Jersey: Prentice-Hall.
Gregory, Kip. (2004).Winning Clients in a Wired World. New Jersey: JOHN Wiley & Sons
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