The beauty industry has survived when millions of other industries have failed. Then why is it that our industry has such a bad reputation with banks and credit personnel? The public’s perception is that we lack modern management and sophisticated marketing and business-building skills. I can’t tell you how many times I have heard at industry shows and from different bankers that thousands of salons are going out of business.
You have only to talk with industry leaders to find out this isn’t true. Bob Peel of Peel’s Salon Services says new salons are opening all over his territory, and he is now remodeling salons for the fourth and fifth times. He says he can count on one hand how many salons actually closed. He’s had a 2%-3% default rate over the last 50 years. Howard Hafetz, president of distributor Raylon Corp., believes that bankers should stop reading reports and start to understand our business. We are in a look good, feel good society. More working women are driving the economy and men are coming to salons in increasing numbers.
To get an objective point of view, I requested a Dun & Bradstreet report on business failures in our industry. This data is not an estimate; it represents complete tallies of beauty business failures. The report indicated that over the last five years, we have had a failure rate of less than 5%. Dun & Bradstreet’s overall feeling is that we are a unique industry that serves a purpose for families, allowing a continual repeat business. In addition, they feel the overall success is due to the low debt associated with running a salon. They project an upward trend with no end in sight.
It all boils down to one thing. the growth potential for our industry is unlimited. No matter how the public views our industry, we should head into the millennium with our heads held high.
Jeffrey Grissler is vice president of Quest Resources (Edison, NJ), beauty salon finance specialists.