If you are reading this article it means you are wondering how booth rent works in a salon. Whether you’re a salon owner or interested in renting the considerations are similar. If you’re not sure what ALL the questions are to ask don’t worry! While there is much to know, the answers you’re looking for are here.
Booth rent in a salon is when a salon owner provides workspace and amenities for stylists. In turn, these stylists will pay rent and will have control over their booth, running it as their own business within your salon. For the owner, this means that you get to obtain rent regardless of how many clients the booth renter sees, however for the most part good or bad you are not responsible for how the stylists run their business.
While appearing straightforward and simple, offering a booth rental model can be can have its challenges. As with any choice, you must do your research to determine how booth rental will affect your goals, your livelihood, and your life. A good place for you to start is by considering the pros and cons of booth rental.
Pro: Lower costs of doing business
As the owner, you can reduce the costs of running your business by renting booths to stylists. The rent you charge can cover costs that you would otherwise be 100% responsible for. Costs of doing business such as lease, employment taxes, healthcare for stylists, perks, etc. will cut into your profit, but by having stylists rent from you your costs and expenses will be reduced because they will pay some portion of running the business. Thus, you can make more profit.
Pro: More reliable income
Renters are charged a fixed rental price and this price is paid to you regardless of how many clients they have. To figure out your booth rent pricing take into account what your TOTAL business expenses will be, how much you can and want to pay for the expenses, and then determine how much you can charge renters that the market in your area will bear. You must do your homework in your local area to determine what you can charge.
Pro: Building the business team you want
As the owner, you get to select who will be in your salon all day. This is good news! You get to interview and choose who will represent you and your business. Start by knowing the environment you want to create in your salon and then make a list of potential stylists’ characteristics that will add to the atmosphere you are looking for: personality – will they add to or detract from the ambiance and make it a great place for clients? Do they have the education, skillset, and personality you want? By doing your due diligence and interviewing based on your goals, renting booths to individual stylists can get you the team YOU WANT.
Con: You have less control over your business brand
Your renters are business owners so they will have their own identity, their reputation, their client list, and they will be their brand. You can count on them to do their own thing, which could mean less salon brand recognition for you and less “team spirit” in the salon. TIP – One way to mitigate individual stylist branding and to make a more cohesive team, consider doing light marketing for the entire salon to keep some brand recognition. Your renters will see this as a perk and because of the marketing you do for everyone they will see themselves as part of a business larger than their just their booth and they will conduct themselves more as team members rather than independent contractors.
Con: If you don’t like being a leader and manager a booth rent model could be difficult for you.
Thinking about your personality and what role you want to play in your business is an important consideration. Renting booths to individuals means you have different personalities spending time together while also being dependent on each other. For example, they will count on each other for the good mood of the salon, they will represent the salon to each other’s clients, they may answer phones, they’ll be responsible for keeping the salon clean, agreeing on the inside temperature, choosing the music to play, etc. You, as the owner, will be required to lead by example and show how to treat people, stylists, and clients, and how to be a good steward of the business for all involved. Most importantly, you will be accountable for conflict resolution. Consider if you want to play this role.
Now, beyond pros and cons, some questions must be addressed to help you become knowledgeable and make the choice that is best for you when it comes to booth rental. At this point you have some idea of why or why not renting booths will work for you, but you may also have some more questions that require in-depth answers to help you become the successful owner you want to be. Questions such as:
How do you find booth renters?
Word of mouth is always the best and lowest cost way to find booth renters. Talk with your industry colleagues, use social media to post and spread the word, post onto job sites, contact local cosmetology schools, attend hair shows, be loud, and let people know that you’re looking. Don’t underestimate the number of people you know and speak to every day. Have fun!
Check out our tips on booth renters HERE.
How will you charge booth renters?
First, research your local market and do some competitive pricing analysis, check out social media platforms, and ask other industry colleagues who might know. In 2020, booth rental around the country was as high as $1000 a month in Manhattan, but it was more typical to charge $150-$400/mo. depending on location.
Second, Determine your business expenses. For example:
- Lease payment
- Property taxes if applicable
- Insurance – renters, equipment, liability, etc.
- Banking including credit card fees
- Software – not going “old school.”
- Cleaning fees and supplies
- Utilities – HVAC, internet,
- Association dues – if you’re part of a business park
From your market research and your expenses anticipated you will be able to decide the best rent to charge. Remember, how much of the business expenses can you and do you want to pay? This will help you determine how much to charge booth renters. You can find more information about calculating booth rental costs here: https://bizfluent.com/how-12098216-figure-rent-salon-booth.html
What agreement(s) should you have in place?
A rental agreement is a must. A MUST FOR BOTH PARTIES. The purpose of the agreement is to structure all expectations including rent amount and all policies & procedures so there are no misunderstandings ever. The components of a lease include, but are not limited to:
- The lease rates.
- The length of the contract.
- Who sets prices and collects the money?
- Who pays insurance?
- Specific language regarding cancellation of the contract by either party.
- What amenities you, as the owner, will make available to renters: use of a station and reception area, utilities, credit card machine, shampoo area, towels, hairdryers, and other salon equipment you choose.
What are the best practices for salon owners with booth rentals?
- Always be professional – in appearance, in conversation, and never participate in gossip
- Follow the rental agreement guidelines – always.
- Always keep your cool. When there are disagreements between renters always stay calm. Never raise your voice, never swear at anyone, and certainly never make threats. While your clients are your customers, so are your renters.
- Remember, renters, are an owner’s tenants, not friends.
- Owners should be available for their renters when needed. While it’s not always convenient, they are a tenant and will need an owner’s help from time to time. Be courteous and willing to helping when needed.
There you have it! Answers to questions that you may and may not be thinking about regarding salon booth rentals. Make sure you weigh the pros and cons and if you decide to rent booths be sure to make it a business arrangement with an agreement in place and best practices.
What’s the difference between booth rental and a salon suite?
Booth rental is the same as a chair rental in a salon and puts the stylist in the open along with all other stylists. A suite rental gives the stylist a private space separated by a curtain or door.
Why would I choose a booth rental model instead of a commission model?
When running a commission salon you are still the owner of the business responsible for all aspects of the business. Booth rental frees you, the owner, from the daily tasks of ownership – marketing, product purchasing, fees, etc.
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Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Shawn Chun is an entrepreneur who has owned several types of businesses from a coffee shop to an import and export business to an online review business plus a few more and now creates online resources for those interested in starting a salon business. It is demanding work he loves to do it. Shawn says “I do it for those passionate about their business and their goals. I know how hard the struggle is to obtain and retain clients, finding good employees all while trying to stay competitive.”
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