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Business > Articles > Free Agents: What Every Booth Renter Should Know

By Kate Hahn

Ah…independence. The freedom to do our own thing is at the heart of the American Dream, and booth renters exemplify that entrepreneurial spirit. But being self-employed can have its pitfalls. To operate your station like Donald Trump, not Paris Hilton, you need more than scissors and the will to succeed. Here's what every booth renter must know to keep her business up and running.


The Basics

First off, understand that booth renting basically means you own a small business. You set your hours, wear whatever you want, offer only the services you choose, and behave any old way you please. Sounds like something Paris would love. But wait. You also book appointments, buy products, pay a rental fee to the salon owner, and get a business license if your local government requires it. Forget health benefits, paid education and vacation. And if your hours or attitude aren't appealing, clients will walk. "No one is there helping you be successful and looking over your shoulder," says BRYAN DUROCHER, founder of DUROCHER ENTERPRISES, a salon coaching firm in Miami.

Still, if you have a strong inner-Trump, booth rental can be the only way to go. "As a stylist, I prefer renting," says RUH WEBB, a hairdresser who currently rents at HOWARD KURTZ salon in Los Angeles. Webb has been both a salon owner and a commission stylist, so she has first-hand experience with a variety of work modes. She points out that it takes a specific type of personality to succeed at booth renting. "You have to be driven. And in LA you need to be making at least $1500 a week to make it work," she says.

The Right Salon
So you've accepted the basic pros and cons of the business. But are you working in the right salon? You can bet that if The Donald were looking for a place to set up shop, his first criteria would be expressed by that old real estate maxim "location, location, location." Sure, as a booth renter you're an independent contractor. But the salon where you rent can make flying solo feel like you're in a private jet - or a clunky prop plane. The location should be clean, friendly and easily accessible to walk-ins, and packed with other renters who share your high standards for performance and service.

If you're thinking about going to a new salon, or renewing the contract at your current one, don't hesitate to negotiate with the owner. "When good people want to work at our salon, we make an effort to make the transition easier for them," says PATRICK ROGERS, an attorney in Dallas who co-owns SALON BERLIN with his cosmetologist wife ROBIN. For instance, he's offered incentives like a break on monthly payments, giving renters two weeks free at the start of the contract, and another two weeks without a charge somewhere else down the line.

The Contract
Once you've found a place you want to call home, you need to have a written contract with the owner. No two ways about it. It's for your protection and theirs. "A contract is required for recognition of independent contractor status by the IRS," says Rogers. It will state the flat lease rate you pay every month, and what you get in exchange for that fee. "If you're paying a percentage of your sales, and not a flat rate, then you are not an independent contractor," says Rogers.

Rogers says that some of the things the contract typically offers you are a station, use of electricity, the phone, the shampoo area and certain equipment - plus services like reception, a credit card machine, towel, and backbar. It also spells out your obligations to the owner, which include paying your own taxes, protecting salon property from damage, keeping up with laws, and indemnifying the salon from losses resulting from your actions or omissions that harm a third party. The document also protects you in case things don't work out. "It should contain standard language allowing you or the owner to cancel the agreement within 30 days, as long as written notice is provided," says Durocher. The length of a contract varies but is typically six months to a year.

Gray Areas
Although contracts spell out most details, there's still a lot of confusion around certain areas of booth rental. Ms. Hilton would just bat her eyes and change outfits at the mention of these little details, but you need to understand the specifics. "Some owners offer a la carte items," says Durocher. "For example, you might pay a $175 weekly flat rate, with the option of tacking on an additional $25 if you want the services of the receptionist." If you want, you can decline the front desk services, and just make your own appointments via a cell phone. It doesn't affect your status as a booth renter.

Some salons also have flexibility regarding items like credit card machines. But sometimes it's best to handle things yourself. "When I was an owner, we had one credit card machine that all the booth renters used - but it was kind of a pain keeping track of which stylist owed what at the end of the month," says Webb. There probably won't be any centralized salon software that will allow you to log on throughout the day, so count on keeping your own records. Webb is tech savvy, and stores all her client information in a laptop, so she has everything from addresses, to appointments, to color formulas at her fingertips.

Market Yourself
Once you have all the technicalities in place, the key to being a successful booth renter is attracting people to your chair. "There is no magic bus of clients out there, just driving around looking for you," says Durocher. Since the owner doesn't promote you everything is DIY. Webb has a website, which she says is the main way she brings in new business. It features press she's received, a bio, a clear menu of services, before-and-after client pictures, and more. "If you have a website, make sure you have a way to drive traffic to it," says Durocher.

A great advertisement is your clients. "Make your client your billboard and spokesperson," says Rogers. "Treat her like a valuable asset, listen to her problems, and save her the misery of listening to yours." Durocher recommends enlisting clients in referral programs, and rewarding them when they bring you new business. This spring, he's releasing "The Secrets of Ka-Ching," a self-study program that uses audio and a workbook to help you determine the kind of client you want, and attract that person to your chair.

To help fill your books, Durocher recommends joining at least one networking group, like your Chamber of Commerce, Business Network International (www.bni.com), Le Tip (www.letip.com), or National Association of Women Business Owners (www.nawbo.org). And don't be shy with the press. "If you've done something interesting like traveled to New York for an education seminar or helped a community organization with makeovers, send a press release to your local newspaper and let them know," says Durocher. Unfortunately, not every client who comes to your station will be fabulous. "The bottom line is you have to keep your business profitable," says Webb. "So if a client is habitually late or a no-show, you need to get out there and replace her with someone else.

Insurance and Taxes
So the kind of clients you want are pouring in the door. What if one of them trips on your blowdryer cord, sprains her ankle, and sues for emotional distress because she can't wear her YSL platforms? Protect yourself with the right insurance. You need personal liability. You also need health insurance (in case that lawsuit gives you stress-related back pain.) And disability isn't a bad idea either (in case the back pain leaves you flat on your Serta for a month.) Make sure you're covered before you plug in your flat iron and line up your products.

You also need to cover yourself when it comes to the IRS. "Taxes are not complicated if you keep good records, especially expenses," says Rogers. Webb enters everything in QuickBooks, an accounting and financial software program. "You can also use a simple envelope system," says Durocher. Just label envelopes "rent," "insurance" and other expenses, and update them monthly. Although you pay a little more federal tax than regular employees (all of your Social Security and Medicare instead of half), you can also deduct expenses that they cannot, like supplies and equipment. Since you pay taxes quarterly as an independent contractor, Rogers advises putting away 15% of your income each week in anticipation of writing that check to the IRS.

Maintaining Momentum
Remember, you are in control of how much money you ultimately make. The numbers can be impressive. Durocher works with a booth renter who brings in $200,000 a year. But he hasn't made that money idling away in his penthouse. "He's in a high-end location, has been in the business a long time, and has a full-time assistant, which allows him to double-book," says Durocher. "He's the exception, not the rule."

Even so, a more typical booth renter can pull in a good salary as well. Rogers reports that an employee with a 70-75% commission rate may do well as a booth renter. "A typical 50-60% rate will translate into a 10-20% increase in net income for the booth renter," he adds. Webb is also pleased with her income. "I'm actually much happier than when I was an owner," she says.

Booth renting success also depends on the area of the country in which you live. "It's practically nonexistent in the Northeast and is even illegal in some states, such as Pennsylvania," says Durocher. "But it's huge in California and Florida." So if you live in the right place, and have the drive to have a skyscraper named after you (or maybe just the motivation to make your own American Dream come true) booth renting can be the only way to go.

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