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Commission Vs. Rental: The great debate

Hey loves! I've been getting a lot of questions lately about whether I suggest rental or commission based salon structures.  The answer is I can't necessarily suggest one over the other.  I think we are fortunate to work in an industry with so many options and it's important to know the pros and cons of each.  I hope this article sparks conversation, but I don't mean to start controversy so, as always, these opinions are my own and I'm certain that other stylists could feel differently.  

Commission Salons

What it is:

Commission salons are generally owned by one or more salon owners who may or may not take clients.  All of the transactions are run through the salons POS system and are tracked by salon management.  Salon ownership takes a portion of the proceeds from the service (usually 50%-65%) and retail dollars (Usually 50%-100% of the proceeds) you produce and the remaining balance is yours to keep.  You generally do not have to purchase your own color, retail, towels, backbar, POS system, etc.

Who they are good for:

Commission salons are without a doubt the most lucrative structure available for hairstylists.  Generally commission salons take care of all of your marketing materials and already have an established online presence which is AMAZING when you are looking to build a clientele.  Because you are paid only when you do services, you won't be out any money if you have a slow day like you would be in a both rental environment.  You are also often supported with an hourly wage if your commission is lower than minimum wage, however this varies from salon to salon and state to state so check your area may be different.  

Once you have a very steady clientele (meaning you are pre-booked 4-6 weeks out and you are double booking), you may be tempted to go to a rental salon.  If you are producing $10,000 a month in services, the commission salon would keep about $5000 of that.  You may think "if I were a renter I could pay my rent, buy color and backbar and still come out ahead".  While this may be true, your missing the key component that makes commission salons so special; assistant support.  An assistant doubles your earning potential as they can be applying a color as you do a haircut.  It's much harder to run a successful assisting program in a rental environment so commission salons tend to have stronger support in that way.

Potential Benefits:

Probably the best part about working in a commission salon is the benefits.  Many commission based salons offer vacation pay, health insurance, retirement savings plans and educational opportunities.  This adds up to thousands of dollars a year in "extra pay" if you take advantage of everything available.  

You will most likely also be a part of a really awesome team! Most commission salons try and hire employees who get along well vs rental salons where often times whoever has the money to pay the rent gets to work there.  

Commission salons also tend to have great marketing and tools available for you.  The salon will have a website, Facebook and other web presence as well as brochures and business cards as well. 

Potential Cons:

You are an employee so whatever the salon owner says goes.  Many stylists became hairstylists to express their creativity and sometimes a commission salon can feel stifling.  You'll need to work the hours and days the salon chooses to have you and you'll have to request time off and it won't always be guaranteed.  You can't always have your own business cards or even add personal touches to your station sometimes.  

Rental Salons

What it is:

In a rental salon, you'll rent a booth or chair in an established salon and owe a predetermined amount of rent to the salon owner at the beginning of each new month.  The owner is often a working stylist.  You generally provide your own hair color, backbar, station products, POS system and marketing materials.

Who it is good for:

Booth rental salons are great for established stylists who prefer to run their own show instead of being a part of a team.  They don't mind spending a few hours a week of their personal time dedicated to running the backend of their business and can manage their appointment book, marketing and accounting on their own .  You'll need to pay your rent each month whether you are busy or not so it is important to have a steady stream of clients before taking the plunge.  Your money will be yours to use however you'd like.  You can budget for color and amenities however you'd like and keep the rest as your personal income once the rent is paid.  There is great income potential for rental stylists if you manage your time, business and income wisely.

Potential benefits:

As a rental stylist you won't get a W-2 at the end of the year since you are a business owner.  You'll need to keep track of your finances and file quarterly taxes.  If you are organized, you can enjoy some great tax write offs as a business owner.

You will also be able to come and go as you please.  Once your rent is paid, the owner doesn't get to say how you spend your time so you can make your own hours that work for you.  Need to take a vacation? No problem! You manage your own schedule completely.

You can design your business anyway you'd like.  The salon owner will have decorated the space (unless you are renting a studio which we'll talk about later) but you can create your own brochure, website, business cards etc to set the tone of your business for your clients.

potential cons:

As a business owner you stand a lot to lose or a lot to gain.  If you are disorganized, you will really struggle and most likely find your way out of the industry as a booth renter.  You'll need to be diligent about marketing and self promotion as well as keeping up on education and staying on top of industry trends.  

It is important to file quarterly taxes and to report all of your income! It is easy as a booth renter to hold on to cash or not claim all of your income, but if you ever hope to buy a house or even a new car, you'll need to look good on paper so declare everything.  

You also pay double employment taxes such as Social Security taxes.  Want to have disability insurance to take a maternity leave at some point? That will cost extra too.

The vast majority of booth rental stylists don't maintain retirement savings accounts either so retirement at 65 becomes much more rare.  Be sure you are setting extra money aside for retirement, health insurance and a little vacation pay slush fund if you go this route.

 

I hope I've ironed out the great debate a little bit! I'd love to know what you think.  Let me know in the comments below.  xoxo Britt

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The Great Debate:Rental Vs. Commission
Photo courtesy of salon Nine Zero One at www.ninezeroonesalon.com

Photo courtesy of salon Nine Zero One at www.ninezeroonesalon.com

There are two main options when you are working has a hairstylist.  You can choose to join a salon as an employee paid on commission or choose to rent a chair in a salon.  When I was in cosmetology school I thought I would absolutely rent a chair.  In school I learned about the value of completing an assisting program and continuing my education which is the path I ultimately chose. Having been in the industry for nearly ten years now, I can see the pros and cons to both working rental and commission so let's clear up the great debate a little bit.  

Rental Salon Pros

  • You can make your own schedule.  This is probably the biggest pull for most people especially if you have kids or a busy social calendar.  
  • You can offer whatever services you want at whatever price point makes sense to you.  
  • You are essentially a business owner so you can design your website, business cards and other marketing materials however you'd like.
  • All of your income is yours to keep and do with what you want.  You don't need to tell the owner of your salon how much money you make nor do you owe the owner a percentage of your sales.  
  • Business owner tax perks.  You can write off the cost of purchasing haircolor, retail products, marketing materials, rent, education, education travel expenses to name just a few.  

Rental Salon Cons

  • You need to generate your own business.  Since you are just renting a chair, the owner won't generally do much to help you get clients so you'll need to work hard to market yourself.
  • You need to create a system for ordering and organizing your stock of color and other backbar products.  If you aren't organized or don't create a system for yourself you could potentially run out of colors or over purchase and end up wasting money on products you don't use.
  • You'll need to plan for a trip or two to the beauty supply store each week to stock up on haircolor and other products.
  • You need to pay taxes quarterly.  You'll have to keep very detailed records of your expenses and income and estimate your annual income in order to pay taxes annually.  If you don't pay enough quarterly, you'll have a huge bill to pay at the end of the year.
  • You won't receive any benefits like insurance coverage, vacation days, free education, a retirement account so you'll need to set aside money and pay for these things yourself.
  • If you should get pregnant and have a baby, you won't be able to file for maternity leave benefits from your state because you don't pay into the state disability account. You will also most likely still need to pay your rent even if you are out on a maternity leave.
  •  You'll be responsible for paying rent regardless of how many clients you have.  If your rent is $300 per week and you have a slow week and only generate $400 in services, you'll be left with only $100 in your pocket to pay for your haircolor, groceries and any other personal expenses you have.

Benefits of working on commission

  • You'll receive a weekly or bi-weekly paycheck from your employer with taxes already deducted and accounted for.
  • Your hair color, backbar and retail products will most likely all be purchased by the salon owner for you so you won't need to be making any trips to the store to stock up.
  • You can potentially receive benefits like vacation pay, medical or dental insurance, contributions towards your retirement account, free education, free station products.
  • You'll be a part of a team all working towards the common goal and believing in the culture of the salon.  Often this leads to less drama and a more peaceful working environment.
  • You may have the potential of having an assistant.  Working with an assistant potentially doubles your income because they can be applying you haircolor and doing blow-dry styling while you focus on foiling and haircutting.
  • You don't have to pay rent and often times your commission is supplemented with hourly pay if you have a slow day.
  • You'll be contributing towards the state and federal benefits systems which means that you can file for short term disability benefits if you want to take a maternity leave or if you injure yourself on the job.
  • All of the marketing materials will be provided including a professional website, business cards, brochures, gift certificates, etc.  The salon should run monthly specials and promotions to help you increase sales and build clientele as well.

Cons of working on commission

  • You'll most likely need to work a structured scheduled based on whatever hours your employer requires.
  • You will have to use whatever hair color and retail lines the salon has selected to bring into the salons.  It is very rare that a salon would make an exception to this rule.
  • A portion of the proceeds from each service will automatically be kept by the salon owner.  The portion that is kept is used to cover all of your benefits and the cost of having you working in the salon and a small portion is profit to the salon owner as well.
  • Your service pricing is determined by the salon owner and generally can only be raised and lowered on the discretion of the salon owner.
  • You must request and be granted time off if you wish to take a vacation or an extra day off.
  • Your salon owner can determine how you dress, what your marketing materials will look like and the decor of the salon and you won't have much say about it. 

Whichever arrangement you choose, make sure that you sign an employment contract that details exactly what you will and won't be responsible for upfront.  If it's not in writing, it's meaningless so get organized from the start and be clear about what you're signing up for. xoxo

Put your best foot forward:Preparing for your spa or salon job interview

You've double checked your resume, created your presentation folder, researched your dream salon and finally landed an interview.  Awesome!  This is the final step before your start your career.   I used to be so nervous going into interviews and a few years ago I figured out the secret to letting the nerves go.  Spend the days leading up to your interview doing all of your research and preparing and by the time your interview comes around you'll be calm and collected.

  1. Choose your outfit wisely-When doing salon research I recommended visiting your dream employers in person.  Hopefully you took the time to do your in person research and you should dress to the standards of your potential employer for the interview.  If the team wears all black, you should wear all black to the interview.  If the team wears jeans and a t-shirt, I wouldn't go that casual, but I wouldn't wear all black either.  Maybe a nice colored dress for a woman or dress slacks with a colored dress shirt and no tie for a man. If you are applying for a position and the team wears uniforms which is common in a spa and some salons too, be conservative with your attire and keep accessories to a minimum.   The goal here is to look like you already fit in.
  2. Do your research-Take the time to research your potential employers website, social media and Yelp page.  These outlets will have valuable information about the salon or spas structure, clientele, retail lines, reputation, etc and your employer will be impressed if you've spent the time to research their business.  It makes you appear more serious, mature and prepared.
  3. Interview yourself ahead of time-Spend the days leading up to your interview running through interview questions and practicing what your response would be.  Focus on the tough questions such as "What are three things you feel like you should improve upon" or "How do you handle disagreements with your coworkers or the management team". Don't be afraid to say your responses out loud too.  By doing this exercise the responses to tough questions will already be sitting right on the tip of your tongue waiting to come out in the interview.  This will help melt the nerves away and make you feel more prepared. 
  4. Come prepared-By this point you should have already created your presentation folder.  Grab your folder and make sure that you've customized your cover letter to be addressed to the hiring manager.  It is a good idea to add in some details about the salon you are interviewing at to personalize your cover letter even more.  Even if you've already mailed a copy of your application package, bring a brand new folder filled with the documents anyway.  You never know if the person you are interviewing with is different than the person who initially saw your information so you want to have a copy just in case.  
  5. Portfolio presentation- In my previous post Put your best foot forward: Beyond the resume I discuss the portfolio options.  If you decided to use any option other than a physical book, you should bring an iPad or laptop to your interview if possible to show off your portfolio.  From your device you could login to your Instagram, Facebook, website or a folder of saved photos.  If bringing a device isn't an option, that is okay.  Instead come prepared with a nice portfolio of 7-20 printed images of your work.  
  6. Prepare a few questions-It has always bothered me when I ask an applicant if they have questions and they can't think of a single one.  It has always made me feel like they are disconnected or aren't taking the job seriously.
  7. Pack a thank-you note-This is one of my best tips and can make or break your interview.  Stash a blank note in your car and when you finish your interview jot down a nice, personalized note to the person who interviewed you.  Drop the card at the local post office so that the interviewer receives your card within the first 48 hours.  Less than 25% of applicants do this little extra step and it makes all the difference.  
  8. Practice makes perfect-If the spa or salon you are interviewing with requires a live model demonstration, be sure to line up a model and practice what you plan to execute ahead of time.  If you'll be demonstrating something temporary like a blow-dry or massage, practice on your model at least twice so that you are both as comfortable as possible.  If you need to showcase something permanent like a haircut or eyebrow wax, use a doll head or ask another friend to be your model ahead of time just so that you can work all of the nerves out before you are in front of your applicant.  It is important that when you are practicing to pretend you are in the interview.  Don't be casual just because it is you and a friend practicing in the living room.  Explain to your friend the importance of the exercise and you should both stay very professional.
  9. Above all, relax-I realized that an interview goes both ways meaning that it is a chance for me to interview my potential employer just as much as it is a chance for them to meet me.  You really only want to work at a place that feels comfortable and meets all of your criteria so take a breath and tell yourself "I'm just going to be me and hope that this works out".  Be polite and professional but it is also important to be honest and true to yourself.  If you have to put on an act and become somebody you aren't, you are allowing the employer to fall in love with the character you create and long term employment might not work out when they discover the true you.  

The interviewer is looking for a new member for their employee family.  The less nervous and more prepared you can be, the better the experience will be for both of you.  I always advise new graduates who are about to start the interview process to select the salon that feels like home.  Don't just choose the coolest salon with the edgiest reputation or the spa that is flooded with walk-ins.  Both of those things are great, but if you didn't get along with the interviewer or the team seemed unhappy or cold, go with your gut and keep looking.  Above all else, it is important to find the place that will make you happy for 40+ hours a week for the next several years. xoxo