Successful Salon & Spa Management – Chapter 1 – Workbook Questions

Explain how salons and spas have changed over the years and what those changes mean to you as you plan for salon and spa ownership.
They have gone from small beauty salons and barber shops that were run solely by the owner. One license usually covered anything that pertained to their business. Now the states require a series of sublicences for each individual category. Each state has different requirements. It is important that new salon and spa owners know and understand all of the laws.
Describe the three steps recommended in Chapter 1 for obtaining the necessary licenses for your salon and spa business.
1. Read and follow the licenses required for business ownership.
2. Determine exactly what services your establishment will offer and make a list.
3. See what licenses are needed to be able to carry out these services and how the establishment should be licensed.
What are the five types of locations for salons ans spas discussed in the text?
1. Hotel salons and spas
2. Department store/fitness center salons and spas
3. Mall/Shopping center salons and spas
4. Freestanding salons and spas
5. Medical Spas
Hotel salons and spas are frequently similar to day spas, offering extensive service menus to offset their remote locations. What services could you anticipate being offered at these types of salons and spas?
hair services
full body massage
make-up
hair removal
body wraps
Botox injections
manicure
acrylic nails
pedicures
false eyelashes
permanent makeup
What two boards may control the services offered in a hotel salon and spa?
Cosmetology/Barber Board
Medical Board
What unique contracts or lease agreements may exist in a hotel salon and spa? List each answer discussed in the text and how it could impact your salon and spa operations.
Sign restrictions
Cleaning and Maintenance Agreement
Charge System
Open and Closed hours
Decorating Agreement
Subcontractor Clause
Dispute Settlement Agreement
Major department stores generally contract with large chain salons and spas. How does their purchasing process typically differ from a small salon and spa’s?
The department store usually orders supplies by mass purchasing.
Department store salons and spas usually lease space from the department store, which may be privately owned or a member of a chain. The five major factors to consider before owning or managing a salon and spa in a department store are:
1. The image and clientele
2. How much marketing the store will do
3. Who has the final word on complaints and adjustments
4. Who will do the hair of the fashion models hired for styles show and how and when those arrangements will be made.
5. employee benefits, parking permits, credit cards, accounting procedures, decoration coordination, marketing, production time, etc.
What are the benefits that salon and spa employees receive if they are part of a department store or fitness center salon and spa?
The use of the store lunchroom/cafeteria
Employee discounts
paid vacation
sick pay (sometimes)
group insurance
profit-sharing (sometimes)
Salon and spa rent
Explain how rent is typically determined in a shopping center salon and spa.
The rent is determined by a leasing agreement and may involve a flat rent plus percentage after a certain level of gross sales is reached.
What three factors may influence what you pay for rent in a shopping center salon and spa?
Location
Type of Mall
State of the Economy
What does an association of all shop owners do in a shopping center?
Helps to solve the common problems of doing business, such as snow removal, liability insurance, parking lot lighting, trash collection, and common maintenance.
What is the benefit of purchasing an established salon and spa as opposed to a new one?
It may be more cost-effective because much of the work to set it up may have been done for you.
What are the three benefits of the freestanding salon and spa corporation or partnership discussed in the text?
1.It becomes more valuable as the payments are made to own the building, land, and/or equipment
2. If it is owned by a landlord, they will typically be responsible for the upkeep of the building and land. (The value of the salon itself would be in the equipment and business and not in the building and land.)
3. If the owner lives in the salon the percentage of the building that is used for the salon is tax-deductible.
Describe a medical spa.
It typically combines western and holistic medicine with spa services to create a relaxing, luxurious atmosphere.
Sole Proprietorship
What is a sole proprietorship?
A sole-proprietorship is owned by one person, usually the individual who is running the business.
List two advantages of sole proprietorships.
1. Easiest and least expensive form of ownership
2. The proprietor is in complete control of their own business.
Partnerships
What are three types of partnerships? Provide a brief description of each.
1. General Partnership – responsibility and profits are shared.
2. Limited Partnership and Partnership with limited liability – most partners have limited liability and input regarding management decisions. (These partners are typically just financial investors.)
3. Joint Venture – Like a general partnership, but is for a limited period of time or a single project.
Corporations
Describe a corporation.
It is considered a unique entity, apart from those who own it. It can be taxed, sued, and enter int contracts. The owners are shareholders and they will elect a board of directors to oversee major polices and decisions. It does not dissolve if ownership changes.
Describe the two specific kinds of corporations discussed in the text. List at least two facts about each type of corporation.
Subchapter S Corporations
1. It is a tax election that allows the shareholder to treat the earnings as profits and distributions and have them pass through directly to his or her personal tax return.
2. If the shareholder is working for the company he must pay himself wages that are standard for the region.
Limited Liability Company (LLC)
1. It provides the limited liability features of a corporation ant the tax efficiencies and operational flexibility of a partnership.
2. The owners are members and the duration of the LLC is usually determined when the organization papers are filed.
Franchised Salons and Spas
Why have franchised salons and spas been so successful?
Because of their marketing and organizational strengths.
Name 8 advantages of franchise salons and spas.
Strong consumer marketing
group purchasing power
uniform bookkeeping system
centralized training
exclusivity of product line
help with interior design
group insurance rates for malpractice and liability
group health insurance for employees
Employee Owned Corporation
Name two ways in which employees require stock.
They purchase it when the company is formed or earn it as part of their compensation.
Leased space and booth rental
What are the disadvantages to leased space and booth rental?
Minimal/non-existant business growth
High staff turnover
Inability to manage and educate staff
Lack of quality control standards
Infighting and lack of teamwork
Exposure to tax audits
Inability to sell other salon and spa services or products
A salon and spa can succeed or fail on the basis of its name.
Three of the most important factors to consider in choosing a name are:
It should clearly identify the salon and spa
It should be short and memorable
It should not be so trendy that it becomes dated when styles change
From the telephone book or Internet, list three strong salon and spa names and three weak salon and spa names. Identify the characteristics of each name that make it strong or weak.
STRONG
Avalon Salon and Spa – makes the type of business clear
La Dolce Vita Salon – Short and Memorable
Avanate Hair Trends – Not so trendy that it would become dated
WEAK
Avalon – doesn’t explain what type of business it is
Jake and Ann’s Tonsorial Parlor for Upscale Male Hair Styling Services – too long, no one will remember all of the wording
Avante Hair Salon That “Rocks” – Rocks is trendy and the name will be outdated when it goes out f style.
List two disadvantages of sole proprietorships.
1. The proprietor is legally responsible for all debts against the business.
2. The proprietor may have to fund the business with personal funds and personal loans.