Money Matters

Making Booth Rental Work

In a special focus group, NAILS talked to booth renters and salon owners about how well booth rental works in their salons and how to head off conflict over setting prices, maintaining quality standards, and paying for advertising.

“When I get a new client, I ask my 20 questions. I ask about allergies or any problems they’ve had before with product reaction. I show the client the products I’m going to use. I always get up and wash my hands if I sneeze. They’re impressed. Clients are much more aware than they used to be.”

CLIENTELE BUILDING

She may be rare, but one of our salon owners explained her role this way: “I’ve always felt that my number one job as an owner is to get clients for everyone in my salon.” Clientele building is handled in several ways by our group participants. One technician does her own advertising, although the salon owner pays for business cards.

All the booth renters in our group said they keep their own client card files and do occasional promotional mailings of their own to bring in new clients. Nevertheless, all relied primarily on word of mouth to expand their business.

THE ONLY OPTION?

Are good nail technicians so difficult to find that salon owners must sacrifice their own business goals to accommodate a qualified worker? Are the exceptional nail technicians in such demand that a salon owner must acquiesce to all their demands?

Is the earning potential of an employee nail technician so inferior to that of booth renters that really good nail technicians will only consider working in a booth-rental  situation? The reaction from our group was mixed. Although our booth-renting technicians said that booth rental was the only way to earn big money, they agreed that the salon environment an owner creates plays a key role in their professional contentment.

Said an owner who requires a percentage of income from her booth renters instead of a flat rental, “When I’m recruiting new technicians, I promote the professionalism of our salon. I offer lots of benefits. I once hired a very good tech who at first asked for a high percentage. But she was so happy with the salon that she agreed to a lesser percentage for the chance to work in a salon with a pleasant atmosphere.”

“New techs are afraid of the work and unsure how to build a clientele. Salon owners can do a lot by creating a safe environment and helping them get clients.”

CONVERTING FROM BOOTH RENTAL

The salon owner in our group who had decided to convert her salon from booth rental to employer/employee felt that her efforts to keep her staff happy had cost her the control she needs to run her business effectively. “My staff saw me more as an employer than I saw myself. They wanted me to do all the work for them, but they wanted the freedom to work when they wanted and to make their own rules.

“I may lose one or two of my staff by changing, but I think that the rest will be happy with the new arrangement. I can offer benefits so they stay committed and want to work for me. I can set up profit sharing, give them a percentage for day care, provide health insurance. These things are things that create job security,” she said.

Can the salon owner and booth renter both earn a good living by following all the rules and paying all the taxes, or is going over to an employer/employee situation a losing proposition for both?

“I’ve had many friends tell me I’m crazy to change to an employer/employee system,” said the salon owner who is converting. “They say that doing it the right way means you can’t make any money, but I’m figuring the numbers. You do goal-setting, you match worker productivity to worker benefits, and you have to make it a win/win situation.  It’s the hard way to do it but it’s the best way. I can’t believe this industry is going to remain the same when every other industry in the world is changing its ways. The IRS went after waiters and waitresses, and sooner or later they’ll come after the nail techs.”

PLAYING ROULETTE WITH THE IRS

The nail technicians in our group said they believe only a very few nail technicians report their full income to the IRS. Said one, “When a tech is on her own taking in her own cash, she is not reporting the income.” All nodded in agreement.

I asked the group whether nail technicians seem worried that the nail Industry might be targeted by the IRS. Surprisingly, they indicated a sense of invulnerability.

“It’s hard to prove that people are pocketing the money.” said one technician.

A salon owner said she thought owners would be the ones to take the heat first. “The IRS is putting the heat on salon owners, who will put the heat on techs. But the sense among nail technicians is that they will not get caught.”

One owner said the buzz among salon owners is that the IRS is currently conducting random checks and will soon concentrate on the industry. She is worried that she may be too late in converting from booth rental: “I want my salon to live a long and prosperous life. If I don’t start making goals and planning the big picture, then I won’t grow.”

GETTING IT IN WRITING

Despite the acknowledged lack of control our group’s salon owners said they felt, none require employment contracts of their workers.

“I feel bad about asking technicians to sign a contract. A client of mine who is a lawyer gave me a form and tried to get me to use it.

The contract outlines where a technician can work if she leaves the salon. But I’ve heard that contracts won’t hold up in court,” a salon owner said.

None of the technicians have contracts, and in fact, none work at a salon where there are written rules and regulations. Said one technician, “The only agreement I have is that rent is due on the first of the month and I’m supposed to tell the owner when I’m working.”

Salon owners who foster teamwork and create a productive environment should be able to maintain a talented and committed team and see their salon profit – whether staff members are independent contractors or employees. (Interestingly, the salon owner in our group who offered the best benefits was approached after the meeting by several of the booth renters about possible employment.)

The key to making booth rental work is open communication. This focus group showed the participants the value of such communication: Few of the participants had ever sat with a group of fellow professionals and discussed the challenges they face in their work.

Although booth rental has its advantages and disadvantages, its underlying challenge is one that people in every profession face. People want control over their lives and they want more say-so in their careers. Booth rental gives nail technicians the opportunity to be their own boss. For the salon owner, if she is to ensure that the work produced in her salon is high quality and that a high level of professionalism is maintained, she has to be able to communicate her salon’s mission and objectives well enough at the time of hire to ensure that she hires professionals who share her values.

 

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Keywords:   booth rental     compensation systems  

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