You’ve completed the training. You’re ready to dedicate your life to making other people look and feel beautiful, but you’re not too keen on the idea of working for someone else. Launching your own cosmetology business will give you the freedom and flexibility to do what you love.
Here are some tips for launching your own cosmetology business.
1. Decide on a Business Model
You’ve earned your cosmetology license and you’re ready to start your own business. But what type of business will you launch?
Before you move on to the next steps, it’s important to choose the business model you will follow:
- Freelance: Involves working independently, often at the location of the client.
- Chair Rental: With a chair rental business, stylists carry their own insurance and you receive a percentage of their fees.
- Commission: You pay your stylists commission on each client.
Think carefully before deciding on the right business model. The advantage of a freelance salon business is that you can decide on your hours, how much you want to work, or how little. Freelance stylists have leeway on how they want to run their business without regulations required by salons. You can also decide which services you want to provide.
Chair rental works the way it sounds. You rent a chair and a place in your salon to a freelance stylist. You can negotiate a rate with the stylist and specific agreements. The advantage of this model is you can earn passive income and you do not have to pay benefits and insurance as you would for an employee. The disadvantage of the chair rental model is you may lose clients to the freelancer or if the freelancer is not a skilled stylist, customers could assume he or she is an employee and your reputation may be compromised.
The commission-based salon involves hiring stylists that you will pay on commission. This means you will have to take care of marketing, insurance, benefits, and sick pay, but the advantage is that you will be running your own business and have control over operations. One disadvantage of this arrangement is that many talented stylists may see this structure as a launching pad to begin their own businesses, which may result in competition.
2. Create a Business Plan
Once you have decided on a business model, it is essential to put the plan in writing with a business plan. A plan provides a roadmap for your business, will help you obtain financing through the bank if you need it, and can help you define your goals. Sticking to your plan will allow you to budget for wages, stock, and other expenses while avoiding financial difficulty.
Craft a plan for your immediate launch, the first year, the first three years, and the first five years. A business plan is always evolving and needs updates.
3. Register Your Business and Get a Tax-ID
Once you have a plan, you should register your business and obtain a tax-ID. You will need to register your business in the state in which you want to operate. During this process, you will be able to obtain your tax-ID, which will be needed when filing your quarterly taxes. The tax-ID is what will identify your cosmetology business with the IRS.
If you’re concerned that the process of setting up and registering your business will be too complicated, you might consider working with a lawyer or accountant that specializes in setting up new businesses.
4. Find a Mentor
It can be challenging for a new business owner to navigate their way through the local business scene without some help. Finding a mentor can help.
Consider joining local organizations, like the Professional Beauty Assocation, Salon & Spa Professional Association and the Association of Cosmetology Salon Professionals.
These organizations can help provide you with business plan blueprints as well as marketing ideas. They can provide a wealth of information and experience that can help your business succeed.
5. Obtain the Right Licenses
When opening a cosmetology business, there are several licenses that you will need to obtain in addition to your cosmetology license. Regulations will depend on the type and location of your business.
Basic licenses include:
- State Cosmetology or Beautician’s License
- Salon Retail Seller Permit
- Salon Business Operation License
- Federal Employer Identification Number (EIN)
- Certificate of Occupancy
Also, you will need insurance for your salon. These licenses represent a significant investment and is often around $12,000 depending on which of these licenses you might hold already. Salon insurance is around $3,000 annually. It is essential to check which additional licenses you may need in the state you are operating in. Licenses also need to be updated regularly, so be sure that yours are up to date. Display your licenses in an open place in the salon so customers and inspectors can see them.
Creating a Beautiful Future
Many people dream of working for themselves, and if you have a license as a beautician, opening your own salon or freelancing yields significant rewards. However, it also requires taking charge of wages, insurance, licenses, and marketing and requires a significant investment of money. While the risks are high, so are the rewards if your salon is successful. Choosing the right business model and taking care of licensing can get you on the right track to a beautiful career.
