Considering taking over the family business and I need advice.

[helens_hair]

Our mom has owned her salon for over 40 years and is getting into the sunset years of her life. My brother and I are considering taking over the business, but we have some concerns. We are hoping to get some different perspectives, advice and suggestions on how we should proceed.

Getting straight to the point, the salon isn't profitable. In fact, it's losing money every month. The salon has 12 stations and a back room that could be used for eyebrows/waxing/facials/etc, and enough space for a couple manicuring stations. Unfortunately, only 8 stations are currently occupied, and a couple of those only partially (i.e., lower rent). To make matters worse, mom hasn't raised her station rent in a couple years and the business is strictly a station rental model. We also have the issue of the overall look and feel which screams 80s strip mall. Read "big hair" wall art, dark oak partitions and cabinets, and a yellowing drop ceiling with florescent lights. Sprinkle in a bit of deferred maintenance here and there, and you'll get a good idea of what we're dealing with. Moreover, the salon has operated by word-of-mouth (i.e., no advertising, social media, nada) and primarily catered to senior white and Hispanic woman. Local demographics has shifted towards Asian, much of the clientele has died off, and hair style preferences aren't what the once were.

As far as the pros go, the salon is located in a decent part of town and less than a half mile away from one of the most affluent zip codes in the state. It is also a stones throw away from thriving businesses that attract lots of younger, more affluent people with plenty of disposable income. And the salon has a long-standing presence and reputation in the area.

Stating the obvious, we need to be fully rented, attract new talent, and target younger clients.

We have hired a brand designer to create a new logo, branding package, and color palette. We also obtained a domain name and are establishing our business presence on Yelp, Google, and Nextdoor, and plan to set up Instagram and Facebook pages as well. We are considering changing the salon's name to go make it more youthful. Our plan is to begin distributing advertising to local businesses and community centers, invest a small amount in online advertising, and partner with local cosmetology and barbering schools in the area. We also want to tackle the aesthetics and ambiance, but our budget is a big sticking point.

I want make clear that my brother and I are not professionals in this industry. Although we are not completely green to this world, we are going to need some help along the way.

Are we getting in over our heads? Does it make sense to try and save this business, or should we sell it and let mom continue working to her hearts content? If we keep this business, we don't want to work IN the business, so we'll need to hire an operator (i.e., we need to make more money). How do we go about changing the current business model to increase our profits without muddying the waters too much?

I feel like we can do this, but have so many questions and aren't sure where to start. Feel free to give it to us raw and uncut. We need to get the honest truth.

Looking forward to your replies.

Thank you!

 

[Trinity]

*I'm not in the USA

If you read back through recent posts you'll see many of us (nail techs specifically, and beauty, not so sure about hair) are struggling to maintain our businesses. Most clients are stretching appointment spaces, spending less and going DIY. Covid started the decline and the cost of living crisis is hitting hard now too.

My instinct is to advise you to get out now. You need to invest a huge sum, and returns, let alone profit are nowhere near guaranteed. Unless you plan to do it all yourself and are feeling relentlessly enthusiastic and excited I'd be extremely cautious. If you plan to pay someone to run the place there's another amount of money the place needs to earn before profits.

There are new businesses starting up, it's not all doom and gloom but I suspect they are started by those 100% invested and committed and have unwavering belief. If you have doubts, trust your gut.

I saw a statistic the other week that said something like 'beauty was the fastest growing business sector but 55% went out of businesses within the first 2 years' - I can't remember the exact numbers but it wasn't encouraging.

 

[Trinity]

https://www.theguardian.com/busines...onsidering-closing-or-scaling-back-businesses

 

[supergirl360]

Have you thought of using it on one of your low income day in an academic way? Get someone in to do a structured course and encourage these ones to bring in clients to be models etc??

 

[TheOracle]

By the sounds of it, your main problem is that you dont/wont attract the client base you're looking looking for as your stylists aren't looking for or able to give that work.

Pretty decor, advertising etc will help to get people.in, but what happens when they are In the chair?

As the business model is chair renters, your challenge is how you would change them, to perform the work you'd want to get?

I would say, if you're not industry professionals,.it's not your bag.

But good on you for trying.

 

[TheDuchess]

I’m also not based in the US and I’m beauty, not hair.

I’d advise extreme caution. It’s very easy to imagine you can enter an industry as a non professional and pay for the expertise that you need, but you have to be able to manage your manager, who will need support, mentoring and advice, just like any other employee, if you could just outsource all the business management acumen required no business would ever fail.

If you and your brother want a business together buy into a Franchise selling pizzas or ice cream. They’ll train and advise you,and provide a recognised brand and a successful operating system. You will at least have a chance of success. To imagine that you can take over your Mom’s struggling business and turn around its fortunes with nothing more than enthusiasm, general business know how and self belief is to disrespect her experience and expertise.

My daughter came into my beauty business a few years ago. I’d expanded too fast too soon and was in the process of falling flat on my face. My daughter was a highly experienced sales professional,, confident with social media and full of ideas. I felt certain that she’d be able to add value to the business even though she wasn’t a trained professional. Oh my goodness it was a disaster and I nearly went bust.

I was open to her innovations- but she didn’t know enough to ensure they’d be successful. “Trust me Mom, I know what I’m doing”, I heard that a lot, but she didn’t realise that all her changes disrupted existing business, unsettled my team and didn’t bring in enough new business. We survived only because I put on my big girl pants and took back control,

Businesses have a lifecycle, after a period of growth, they become established in their business niche and pretty much run themselves until something changes: maybe there’s an industry change, or a change in the economy or fashion, but eventually business starts to fall away. It’s difficult to turn this around because your experience and expertise are all learned from a business that’s faltering.

If you want to help your Mom don’t give up your day job. Business is basics and retail is detail. Work a few extra hours in her salon, - tidy, clean, declutter. Get rid of stuff that’s faded or chipped. Mom’s regulars will really appreciate seeing the place loved and cared for.

Don’t exhaust yourself with advertising. No-one goes to a hair salon because they saw a flyer or an advert on yelp. If you feel the salon look isn’t right - why are you promoting it? You’ll attract clientele who think they belong in a past its best salon. Then when you change things they won’t feel comfortable and you’ll need to find new clients.

A new shop name and logo - really? So you’re advertising, buying a domain name, thinking about social media - and Maybe You’re Going To Change the Name? You can see where I’m going with this - your inexperience has meant that you’ve hired a professional whose advised you to spend money, but you’re doing things in a haphazard, out of order way. You need to be very methodical. How many new clients has all this activity brought in? What did each new client cost you? How much are you spending for each EXTRA hundred dollars of revenue?

First you need to understand what you are selling (hint, it’s the services that built your reputation, that you do well). It’s no good trying to sell 80’s big hair and Senior white and Hispanic looks to those that want a more Asian or youthful vibe - but your hairdressers may not feel comfortable offering something else. So you need to understand who wants to buy what you have to sell. These are your customers. If you move into different types of look this is moving away from your reputation and experience and you’ll be starting almost from scratch just as if you are a new salon. At this point in your history it’s going to be very challenging to go in a different direction.

Reputation is your biggest asset. Lean in to what Mom built. Everything you’ve done so far is pretty pointless (sorry), it’s distraction. Don’t confuse activity with making a genuine difference.

Your shop window is your biggest advert, make it work for you. Stand on the sidewalk. What do you see? Look at other salons, why do they appeal? Deconstruct exactly what works elsewhere. Go to a shop where you like everything and examine the colour schemes, decor and lighting. Then ask yourself - am I looking in the places where our ideal customers go? (Hint - an ideal customer is the one who is looking for what you do really well)

Good lighting is really really important. Get a quote for the ceiling and decent spotlights. It’s amazing the difference that good lighting makes. Hair comes alive, clients love their styles, the decor you don’t like suddenly looks amazing. There’s quite a lot of science involved, you need to set the lighting to match what your clients use to judge the success of their visit. Daylight may not be the ideal if they are heading out for an evening visit to a favourite restaurant. As no-one uses strip fluorescent lights anymore you are not going to give your clients tha hair colours that suit them in the lighting they use,

Sit down and talk about how many additional new clients you need, in order to pay for the investment you plan AND cover all your existing costs. How many clients spending the average service charge do you need each day? Break it down into how many cut and colour clients, how many shampoo and set (or whatever) Do you have capacity to provide these extra services without incurring additional costs? Talk to the team and find out if they need spare stations to “park” clients whilst a colour develops or maybe for busy periods to help them maximise their work output. Do the math and remember more clients means higher electric and water bills as well as more product costs.

Once you’ve calculated your minimum client numbers and minimum client spend, ask yourself where you are going to find these new clients that will love what you do? Where do they go at present? Are they happy there? What would make them try you - or maybe they left, what would bring them back?

If your plan works you will gain 1-2 clients each week who will return. If you dig into your data you should be able to calculate the return ratio of new clients. There’s not much point spending money to market to new clients if they don’t return so you need to analyse your data and understand how to improve client retention rates. Do you have clients that come infrequently? Are these ladies using you as their second choice if they can’t get into their first choice salon? What would get you to be their number one choice? It takes time and money to bring in new clients. Much easier to retain the ones that drift away.

Ask yourself how much money you can afford to lose before you break even. Because you can’t transform overnight. Do a cash flow based on realistic numbers - a mixture of improved client spend, a higher ratio of returning clients, a modest increase in new clients. What time frame do you have? Will you run out of money before you can turn things around? If that’s possible how will you decide when to throw in the towel? Will you wait until you go bust, or will you decide after you’ve lost a certain amount of money or will you give yourself a set period of time to hit your cash/client projections.

It’s important to think through these difficult scenarios. It may be that your Mom would be better off surrendering her lease and renting a chair elsewhere for her regulars. She might really prefer that after the strain or running a business for so many years. Talk through alternatives and be open to fresh thinking.

Best of luck and keep us posted