Business Management

Should You Stay Or Should You Go?

At some point, every salon owner has wondered if it’s time to throw in the towel. Whether your uncertainly stems from financial problems, changing circumstances, or unmet expectations, only you can make this decision. Our experts offer guidelines and insights to lend perspective and help you assess your situation more objectively.

There was a time when the mere mention of opening your dream salon gave you more energy than a triple espresso. You rolled everything you had into finding a location and furnishing it. Now the grand opening has come and gone, you have barely swept up the confetti, and you’re starting to second- guess yourself. Were you blinded by the visions of success or are these normal growing pains? Just how do you sort it out? How long should it take to get established, and what should you expect? What are your options? Then there is the really tough question: Should you stay or should you go?

The nail industry is filled with so many talented, creative, and tactile visionaries. In a perfect world we would succeed simply because our smile lines are spot on and our reflexology techniques transport clients to another dimension. But, alas, the world is anything but perfect and according to Susie Fields Carder, CEO of Salon Training International and author of Passion, A Salon Owner’s Handbook for Building a Successful Business, “Only 15% of your financial success as a salon professional is based on technical abilities.”

Although nobody will argue the importance of financial success, it is likely not the only carrot that enticed you to open the doors. Fulfilment is what keeps you coming in day after day — until you turn a profit. Success is multi- faceted. Whether you make the decision to close the doors or stay and stick it out, your success is dependent on your own personal interpretation of the definition.

All Signs Point to...

The fact that you are even asking the question “Should I stay or should I go?” is a sign that you have your finger on your salon’s pulse. It is also a clear sign that you should take a deeper look. As long as the business is solvent, you are the only one who can make the decision to walk away.

Ultimately, there are some basic business indicators that suggest you should start to consider a different path. Any one of these factors can jeopardize your business:

  • You are over-leveraged with an increasing debt-to-asset ratio.
  • Retail sales have slowed significantly.
  • Your target market has changed in a way to which you cannot adapt.
  • You have tapped out all sources of revenue to fund your start-up.
  • Your financial losses are increasing.
  • Staff turnover is increasing.
  • You are not having as much fun as you once did.

To make an educated decision, you must look at the numbers first. A simple profit-and-loss statement will give you a snapshot of the salon’s general health. Heather Goodwin, a success coach and salon consultant, insists, “By keeping very clear records and profit- and-loss statements, an owner can easily understand the value of her business. Having this information readily available, a salon can be sold much more quickly and for the right price.”

Those same profit-and-loss statements can help determine if you are on track, financially. An increasing debt-to- asset ratio is an indicator that a salon may have trouble repaying debt. This can be directly related to the slowing of retail sales or the loss of a key employee or two.

Because traditional sources of start-up capital, such as savings and business loans, may be tapped out, you might be turning to credit cards to pay your overhead. This debt can be overcome, but it will take years of planning.

Carder admits, “We all need some help now and then, but if you keep adding more and more to your credit-card debt, without paying it off, you are headed for trouble. The first year we owned our salon, my husband and I paid all our personal expenses on credit cards — $40,000 that year! We didn’t take a salary from the salon because we couldn’t afford it, but we had a debt reduction plan to dig our way to profitability. The following year we paid off the $40,000 debt and gave ourselves a small salary. Each year we increased the salary and reinvested in the business.”

Looking at Your Hand

The simple truth is that every business owner must have an exit strategy. It doesn’t mean you have to use it. Carder points out, “Every day you go to work, you are either building a business to sell or building the business to keep re-buying.” Sometimes, though, events happen that change how we look at the business we’re building.

Hurricane Katrina reminded us how, even with a great plan, businesses can be thrown a curveball that makes it difficult or unwise to continue.

For many salon owners it wasn’t a question whether or not to rebuild because the demographics of their target client changed almost instantly. Take Keith and Andre West-Harrison of Miss Celie’s Spa Orleans, who have bounced back quite well. These serial entrepreneurs had a booming salon business and the beginnings of a consulting business when the storm blew in. They were also being featured on AOL’s online reality series, The Startup 2.

Their personal heartache of unexpectedly losing a salon was shared with millions. They had to take a hard look at the realities of reopening and instead chose to move forward only in salon consulting. Due to great planning, they were able to sell their assets and start the new firm, True Spa Consulting. “As opportunities present themselves, we take them,” chimes Keith West-Harrison.

Not everyone has a cataclysmic event. Maybe a new salon is opening across the street or your best technician is moving on Sometimes it is just a nagging feeling in your belly that won’t go away. The important thing to remember is to keep a clear head. If you are too emotionally charged by all of this, enlist the help of a trusted, unbiased professional. By all means, keep your accountant and attorney in the loop; they can be a source for valuable information on positioning and planning before you make that big decision.

What Everyone Should Expect

So, just how long does it take if all goes as planned? Goodwin points out, “A reasonable timeframe to expect a salon to turn a profit is three years. The first year is paying out, the second year is breaking even, and the third year is turning a 7%-10% profit. Only the top 1% will make above a 10% profit. Those are the owners keeping very tight tabs on their businesses.”

Salon owners can expect the first few years to be filled with trials. “That first year, I couldn’t count the number of weeks I wasn’t sure if I would have enough money to buy groceries,” says Bryan Durocher, a success coach and the power behind the popular coaching tool, The Secrets of Ka-Ching. “Owners become tired and burned out; they have to try something different if it’s going to work.”

Joanna Krotz, who writes about small business issues, says, “The number-one mistake is driving a fire engine without a route. You always hear how entrepreneurs need passion to succeed, the so-called ‘fire in the belly.’ Well, enthusiasm can be overrated. To fan start-up flames, you need more than high energy. You need a plan.”

Do you have a plan? How does your current situation stack up against your written plan? Did your original plan address your personal needs aside from finances? Often the initial plan must be modified... again and again. “It will take twice as long and triple the money you thought. It’s great to have goals, targets, and objectives (and be flexible). Flexibility will save your sanity” says Carder.

Think It Through

Sit down with a pad of paper and start outlining the pros and cons of staying in business. Make a list of each obstacle and what you have done to overcome it. Goodwin points out that many salon owners base decisions on emotion rather than feet. Another problem occurs, she says, when “an owner goes about her day-to-day activities as if nothing is wrong, thinking she can fix things herself or that she cannot afford help. There are so many classes available m the field of business and ownership (for free) at trade shows. Personal and group consultants and coaches are available to customize services based on a particular salon’s needs.’’

Right now you can start thinking about what initially drove you to take the plunge into salon ownership. Chances are the reasons are less than purely financial. There is prestige, power, and the desire to help others grow and succeed. And there is also the need for freedom, which salon owners frequently mention as a motivator.

Durocher points out, “Most new salon owners just wanted to have a place to service their clients. They were not happy where they were and figured they would open their own salon and hire their friends to work with them. There is little structure and most of the owner’s time is taken up bringing in the money (performing services) and not managing the business. Eventually they feel trapped.

“To avoid this pitfall, owners need to limit their time performing services and spend time focusing on working the business. Putting an infrastructure into place will ensure that the business can operate on its own. They need to develop manuals with policies and procedures to guide the day-to-day operations.”

Salon owners also become stressed when they have frequent staff turnovers and inadvertently spend less on training because they want to see if new staff members are going to stay before they invest the money in them.

“Share the reality with your team; people will support what they help create,” says Carder. “Salon Training International has many coaching and educational opportunities to help the salon owner increase profits and institute coaching in the salon.”

You have a lot to think on. You also have an abundance of resources from which to pull. Step away for a moment and look at the situation from the outside in. Weigh each area of salon life and determine if you have more energy to put into it.

And, don’t think for a minute that walking away will mean you will never have another chance. Brian Headd, a U.S. Small Business Administration economist, has done research and found that “previously owning another business seems to increase the chances of survivability.” So, the lessons you learn today may just be the lessons that catapult your next venture to a staggering financial and emotional success.

So, back to the question, “Should I stay or should I go?” You are still the only person who can make that final decision. All salon owners have pondered the question at one time or another. I’ll tell you what my father told me. He said it boiled down to two basic questions: Do you love what you do, and does it meet your needs? As a serial entrepreneur, he owned and walked away from more than one successful business in order to find happiness and fulfilment. He was also my only source of venture capital when I opened my first salon, more than 20 years ago.

Erin Snyder-Dixon is a freelance writer, nail technician, salon owner, and best- selling author based in Newport News, Va. She is currently an educator for Nail Systems International. Her new book Salon Success, Tweaks & Tips, can be found at

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