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Understanding The Salon Booth Business Model

Posted by Emin Andreasian on

Now that you've finished school and have your cosmetology license, what is the next step in your career? Most stylists opt to work with an already-established salon to get their feet wet in their new vocation instead of a riskier option like opening their own salon and working as an individual.

Being a stylist in a salon often means one of two things: working on salary or commission as a paid employee of the salon or working as an independent contractor in the salon booth rental model. The booth rental business model for cosmetologists of all kinds is the most popular method, especially for seasoned stylists. Here are some salon booth rental tips for choosing the right model and making it work for you:

How Does Salon Booth Rental Work?

When a cosmetologist goes to work for a salon owner, they pay a monthly sum that acts as a rental fee for use of a booth, washing stations and other salon amenities. This way, the stylist remains an independent contractor, and can run their business mostly how they see fit without being overseen or coached by a manager or boss.

There are a great many benefits to booth rental for hairstylists, including:

  • Determining your own schedule
  • Keeping all of your profits (including tips) with exception of your monthly rental fee
  • Having control over the clients you work on versus being forced to take walk-ins.
  • Using the stylist products that work the best for you and your clients.
  • Making your own decisions on what you believe is best, instead of following someone else's orders.

The salon booth rental model also comes with some cons and risks, such as:

  • Having to keep track of profits and expenses for tax purposes.
  • Having to market your business by yourself, which can be a lot of work and money.
  • Making sure all licenses are up to date and accurate.
  • Needing to build up enough clients to be able to pay the booth rent and still make a profit. Note: this is especially challenging in the beginning of a stylist's career, and can be the make-or-break point.
  • Having to pay for your own products and supplies
  • Having to pay for health insurance and non-paid sick days. As an independent contractor, the salon owner has no obligation to give you access to health insurance or paid sick leave. 

Booth Rental Contract Negotiation

First thing’s first: a salon owner and a cosmetologist should always enter into a contract before the stylist begins work. A contract outlines the details of what both parties can expect and protect said parties in the event of anything unfortunate. Standard contracts should cover the following details:

  • How long the stylist is allowed to work in the business before the lease is renewed or terminated. This number can vary depending on the people involved. Some salon booth rental contracts are month-to-month and some can last as long as a year or more.
  • The cost of the booth rental that the stylist will pay to the salon owner each month. Once again, this number varies depending on the salon.
  • The terms of a contract cancellation.
  • Outlining the available amenities that the stylist receives when they pay their rent. These should include access to running water, electricity, use of the salon equipment and receptionist. 

The contract is also designed to protect the salon owner against unscrupulous stylists and accidents. It is also meant to outline the obligations of the salon owner.

A standard contract should include:

  • That the salon and owner are not in any way liable for the injury of a client, caused by the stylist.
  • That the stylist will be responsible for compensation for damaged property.
  • The salon owner will take responsibility for paying the proper business taxes and keeping the salon a workable and safe environment. 

Marketing Your Services in a Salon Booth Rental Business

Marketing is the only way to build a client base and start to earn a tidy profit. No one can pay you if they don't know you're there. Good marketing for an independent esthetician starts with what salon you decide to work for. Try to choose a well-known salon that has a good reputation for employing quality stylists. No one wants to go to a salon that regularly comes under criticism from customers or is known for mediocre work. Also, it is important to choose a salon that fellow stylists enjoy working in together. A toxic work environment is often obvious by how quickly people get hired and fired or quit (also known as the “revolving door”). Choose a good fit for yourself, because your work is your daily life -- and you don’t want to have a negative experience every day.

Ideally, the salon you choose should be in a well-trafficked location that is highly visible and accessible to a multitude of people. Being in a dimly lit building complex or one that has limited parking can really hurt your business. While a more visible, well known salon will probably result in higher booth rent, the client base will likely be bigger... and so will the pay-off.

Other marketing techniques include advertising on social media, and leveraging help from family and friends. There are even some platforms that accept paid advertising. For example, if you have the start-up capital, consider a radio or paper ad.

Carry your business card with you wherever you go! Opportunities often come at unexpected times and you may just win over a new client with your preparedness and open contact. Lastly, try joining forces with local business for cross-promotion and new advertising possibilities. When in doubt, ask a successful co-worker for some tips; if they've made it work in your town, they've done something right and taking a leaf from their book isn't a bad idea.


Protecting Your Brand

There are many pitfalls with being an independent contractor. Be sure to take the proper steps to protect you and your business from common problems and mistakes such as:

  1. Make sure you keep track of expenses and profits for the IRS. Independent contractors are required to file and pay quarterly taxes on their income.
  2. Check your state's laws about cosmetology and what sort of licensing you need. You will undoubtedly need your cosmetology license, but some states require an independent contractor business license or a booth rental license.
  3. Carefully inspect the contract made with your salon. Understand your rights and liabilities should something go wrong. Never violate the terms of your contract as the salon owner can take legal action against you.
  4. Take care to never injure or cause damage to a client; this can ruin your business reputation and make it difficult to make a living (rightfully so).
  5. Maintain a clean appearance and clean booth. Sanitation is an absolutely essential safety measure in cosmetology; and a patient that ends up with an infection or illness could spell a lot of trouble for you. Keeping equipment properly running will also help your professionalism and boost your reputation.
  6. Always keep your appointments (unless in a case of emergency) and be on time. Clients are very reluctant to return to a stylist that appears flaky and non-committal. 

Final Thoughts
Though starting on this new career is a big challenge and sometimes scary, this business can be a rewarding and successful journey for the right estheticians. The salon booth business model is a proven way to launch your cosmetology career, so get out there and make a name for yourself. We’re all rooting for you!

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