Business Management

9 Salon Investments That Really Pay Off

Sometimes you have to spend money to make money. Salon owners share their salon-tested investment ideas — both big and small — that not only pay for themselves, but boost profits over time.

Whether you own a large salon or rent a small space in one, you are already a business investor. You have already invested in yourself, for your professional education and your costs of getting started, no matter how humble. But if you want your business to grow, or even just to stabilize, you must continue to invest.

 

In 1982, Linda-Anne Kahn started out giving basic manicures, pedicures, and massages in a 375-square-foot shop in La Jolla, Calif. She kept on making small investments — first in a move to a bigger place, then an expansion, equipment here and there, additional training, courses, computers, more expansions, then more upgrades. Now, she and her husband own Beauty Kliniek Aromatherapy Day Spa and Wellness Center — with 45 staffers.

 

Here are nine investments, both small and large, that have improved the bottom line for people in the nail business. Their stories show that even small salons and newcomers can make the stretch on large investments, and even large spas can reap rewards on small investments.

 

You — Your Best Investment

“Anybody can do anything,” Kahn advises. “But you have to have education. Study reflexology, aromatherapy, work with hot stones, learn massage therapy.” These skills let you add special services at higher prices. Nail technician Kate Martes had been doing all right with her Salon 2141, a small shop in San Diego where she rents space to another nail technician and two other beauty professionals. Then, in 1995, she took an intensive, three-day course with Creative Nail Design to learn pink and- whites.

 

“This was the pivotal point for me in turning around my business,” says Martes, who has been a tech for 11 years. “Pink-and-whites were just coming onto the scene, it was something new. They gave us intensive, one-on-one training.” The course gave Martes an artistic edge that literally turned heads. Within nine months, Martes stopped taking new clients. Now, she takes new customers only on referral, even though she charges $10 more for services than other local nail techs. She estimates 90% of her work is pink-and-whites.

 

Investment: Martes spent $200 for an intensive, three-day course

 

Return: Full schedule, loyal clientele, can charge $10 more for services than her competition

 

Cash Up In Smoke?

Angela Cortright owns the large Spa Gregories in Newport Beach, Calif., but offers a simple investment tip within reach of even the smallest shop: electric candles. Like many salons, Spa Gregories offers the soothing, romantic ambience of candles. That comfort was costing Cortright up to $4,000 yearly. The soot required a paint job every two years, burdened the air conditioning system, and threatened employees’ health. When her retail manager discovered electric candles, Cortright spent $600 on a couple dozen. They fit neatly into the burn wells of existing wax candles. The candles recharge at night, and flicker all day. You absolutely cannot tell that it’s not a real candle,” Cortright says. “We don’t have a single natural flame in the spa now.” Manufacturers offer quality electric candles for $25 to $40 each that last three to five years. Two companies are Great Ideas (www.greatideas.ws or (949) 631-5600) and Norex (www.norexbuydirect.com or (800) 992-1236).

 

Investment: $600 for 25 electric candles with recharging units

 

Savings: $3,000 to $4,000 yearly; prolongs the life of interior paint; protects employee health

 

Profit in the Cyber Margins

Kahn took her Beauty Kliniek to the next step of growth when she invested in a website. Even more important was finding a web marketer who would position her page with different search engines and monitor changing marketing patterns. “I cannot tell you how many people find us by searching the web,” Kahn says. It can be daunting to launch into a new technology, but web designers offer basic services for as little as $500 in many cities.

 

Check in your local Yellow Pages under Web Site Services. Many areas have local computing magazines where local designers advertise; also check at stores that sell computer components. Your local community college may offer a web design class; call the professor and offer your business as a design project for his or her students.

 

Investment: As low as $500; Kahn spent $2,500 for original web page design, $1,500 monthly for web marketing; time for spa director to expand and update page

 

Return: Kahn saw 40% increase in Internet sales, especially gift certificates; new clients and prospective employees

 

Privatize Your Pedicures

Although her large Spa Biba of Jenkintown, Penn., offers a range of services, Maria Goodman calls private pedicure rooms “one of my best investments.” Goodman spent $6,000 to $7,000 to build and equip each room in an area adjacent to the facials and massages. She recovered her investment in one year and doubled her pedicure income. There has been such demand that she plans to build a third room. “My clients are wearing terry cloth robes and flip-flops, their hair is messed up, they aren’t wearing makeup. They love the private pedicure rooms because nobody sees them,” Goodman says. Even on a tiny budget, a nail technician could offer a sense of privacy and a spa-like atmosphere. Goodman started one of her pedicure areas with simple Oriental screens and leafy trees to separate the space, an inexpensive manicure table, a canvas director’s chair, and a large ceramic basin from a china outlet — filled with rose petals. “You have to make it pretty,” Goodman counsels.

 

Tuck the pedicure area into a quiet, low-traffic area of your salon. Glass construction blocks or hanging tapestries could become partitions. Adjustable lighting, an electric waterfall, living plants, flowers, aromatherapy candles, and a small compact-disc player for mood music all help create a spa-like environment at low cost.

 

Investment: $500-$1,000 for simple equipment, partitions and decor; more if construction is required

 

Return: Goodman recovered her costs for the original pedicure area in less than two weeks and recovered her investment in two pedicure rooms in one year

 

Computerize Your Business

Computer programs can help you schedule appointments, avoid overlaps, and make the most of your staff and treatment rooms. You can compare the productivity and retail sales of employees, keep inventory, analyze cash flow, recognize areas of increased or decreased demand, and track gift certificates. Client databases help you grow through marketing.

 

Basic software for a small shop starts as low as $900, plus about $1,200 for an inexpensive computer, printer, bar code scanner, receipt printer, and cash drawer. Some programs used by beauty professionals include products by Elite Software (www.elitesoftware.com or 800-662-ELITE), HARMS Software Inc. (www.harms-software.com or 888-813-2141), Salon Transcripts (www.salontranscripts.com or 800-766-4778), and The Mikal Corp. (www.mikal.com or 800-448-5420).

 

Five years ago, Angela Cortright started her business using a scheduling and management software. It cost $8,000, but her spa coordinators cost around $130,000 yearly in salary. Without the program, she estimates she would need to double her appointments staff to coordinate her 65 spa workers. “There’s no way you could run a business like this manually,” says the former software executive.

 

Investment: As low as $2,100 for salon-specific software and hardware

 

Savings: Cortright saved more than $130,000 in yearly payroll costs for additional staffing employees; use marketing tools to identify and correct areas of weakness

 

Profits Down the Drain?

Water is cheap, but it could be costing you a bundle. Cortright estimates she had invested $50,000 into equipment at her Spa Gregories. Footbaths, a hydrotherapy tub, facial steamers, Vichy showers and other aquarian devices had allowed her to upgrade her services. But hidden away in all those pipes, Southern California’s hard water was threatening her investment with calcium deposits and corrosion. She installed a complete water filtration system for treatment rooms and a reverse-osmosis system for drinking water. Besides saving money, the system also frees up space where water bottles had been stored.

 

Investment: $8,000 water filtration and reverse osmosis systems

 

Savings: $5,000 yearly for bottled water; longer life for $50,000 in equipment

 

Bronze Your Earnings

Tanning equipment made a huge difference in the bottom line for Club Monaco co-owner Kim Monaco-Crevar of Northfield Center, Ohio. The four-station salon opened in 1997 with a single tanning bed. Monaco- Crevar found that tanning interest swelled in February in anticipation of sunny winter vacations, and again in April, as people polished their looks for summer. Most tanning customers were unfamiliar with the delights of pampering their hands and feet. So Monaco-Crevar and her partner sent coupons for nail services to their tanning customers. A recent spring break promotion generated 15 new, regular nails customers among the tanners, she says. “Tanning helps the nail business because you have constant traffic in and out of the salon,” Monaco-Crevar said. She expanded to two tanning beds right away, and now is up to three with plans to buy a fourth.

 

Investment: One inexpensive 28-lamp tanning bed — $2,500; replacement bulbs — $560 per year; increasedelectricity costs

 

Return: Additional traffic of 66 people in salon, per bed per week, February through July

 

Expand to Grow

Sometimes the only way to grow is to get physically bigger. With bank loans at historically low rates, expansion now could be a good investment in your future. When Goodman expanded her Spa Biba, she grew from seven rooms to 15. It took a move, two years, and about $100,000 — an investment that took another two-and-a-half years to recover. Now, Goodman grosses about $1 million yearly, double her pre-expansion earnings.

 

Goodman suggests a nails-only salon owner could invest in a three-room expansion to accommodate a massage table, facial room with steam, a private pedicure room, and a bathroom with a simple shower. “Make the area extremely private, with no noise from the rest of the salon, so when clients go back there they feel that separation,” Goodman advises. “It’s like a mini-spa and it starts you up. People will like it if you have it tucked away.”

 

Investment: $30,000-$35,000 minimum to build and equip three basic rooms (more in expensive areas)

 

Return: Higher prices for services; Goodman estimates she recovered her own similar investment within the first year of operation

 

Get Ahead of the Pack

Some investments seem extravagant, but pay off if they make your business stand out from the crowd or put you ahead of the beauty trend curve. Nail technician Melissa Webb was 25 years old and eight months out of beauty school when she had enough of renting cramped space in a big, multi-service salon.

 

“I daydreamed about having my own salon. It would be all about comfort,” Webb reminisces. In 1999, Webb opened Solitude Nail Studio and Spa in Reno, Nev., with one renter and five spacious manicure stations. She quickly invested $10,000 in two new pedicure thrones. “They were the most expensive chairs on the market,” Webb recalls. But no other shop in town offered fully reclining thrones, a special heater to keep the water extra warm, arms that swung out to accommodate large clients, and extra room for the technician to work.

 

“Once our clients started getting pedicures, they began telling all their friends. It was like being Queen for a Day,” Webb says. Business nearly doubled in four months. Eventually, other salons in Reno also purchased deluxe thrones. By then, Webb had gotten a jump on her competition that still helps her today. Of course, if you don’t want to invest in pedicure thrones you can still upgrade your existing pedicure services with strategic add-ons to your standard service.

 

“You can charge more because you’re doing more in the treatments, and your nail technician can earn more per hour,” says Kahn. At her Beauty Kliniek, clients are tempted by French aromatherapy treatments, which include eucalyptus or lavender essential oil in the footbath, epsom salts scrub, peppermint masque on the feet, a massage of the feet and legs with lotions chosen by the client for the desired therapeutic effect, and cool towels wrapped on the feet.

 

Investment: Two deluxe pedicure thrones at $5,000 each

 

Return: Clientele nearly doubled; salon has grown to 1,000 customers/month

 

Investing Can Be Scary — and Mentors Can Help

Investing in your business is a way of growing your business. That can be scary! You may be going out on a big limb, sinking thousands of dollars into an idea that you believe in, but unsure whether it will pan out. Melissa Webb remembers how she felt when she decided to spend $10,000 on two, top-of-the-line pedicure thrones when she opened Solitude Nails Studio and Spa in Reno, Nev. “It seemed like a fortune!” Webb recalls. But her investment paid off by making hers the only salon in town with such a luxurious service, and her clientele boomed.

 

Academics call this willingness to plunge into the unknown a “tolerance for ambiguity,” says entrepreneurship assistant professor Lena Rodriguez of San Diego State University in San Diego. Researchers have been studying it for years as one of the personal qualities that make entrepreneurs different from other people. “There are all of these psychological variables that they’ve looked at, but the research really is not conclusive,” Rodriguez continues. “There’s no cookbook that will give you a recipe for being a successful entrepreneur.”

 

Instead, Rodriguez suggests that business people look for mentors who can pass on their wisdom and experience, as they decide which investments are right for growing their own businesses. “The best strategy is to find a business that you would like to emulate,” Rodriguez says. Look at the type of services being offered, the kinds of clients served, the geographical area. Call several people who fit your vision, introduce yourself, explain that you are looking for advice, and propose that you meet. Be sure the people you contact are not in the same immediate area, though; you don’t want to pose the threat of competition.

 

“You’re afraid [of expanding your business] because it’s an unknown, but somebody else who’s been through it can say, well, this is how I felt,” Rodriguez says. “A lot of business owners are more than happy to share what they have learned. You need that support mechanism.”

Keywords:   business building     mentoring     tanning     web marketing  

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