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Posted By:BTCAdmin on: 9/3/2004 4:32:34 PM

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Thread: Salon start up

AJWalsh
Posts: 1

Posted: Wednesday, December 31, 2003 12:43:00 PM

Hi!!

I'm a little depressed. Let me explain.

I have been planning a salon for several years. My frustrations are in the department of financing (of course!)

Here's an outline. I'm planning a pricey location, a brand image,specific product lines, some of these lines are traditional product lines and some are luxury designer brands. A medium sized service area, two private rooms, a designated manicure pedicure area, The business is designed 50 percent service and 50 percent retail in spacial terms. I have several employees interested in working for me who's work I'm familiar with.

The problem is that I didn't take this planning course to be a pie in the sky salon owner but because this planning strategy (and others in the plan) was what I feel to be the most profitable over time. But many things that I feel success to be contingent on are also things I don't have the money for. Such as some of the brands I would like to retail will cost 10s of thousands to carry. And the price of locations I'm considering is way up there, yet the plan would be too risky to compromise or consider a less than appropriate location. Furnishing the salon is manageable for me as well as creating a brand image and advertising. But as I go along I realize that some very important elements are out of my personal financial range.

I've had to begin to consider business partners which I'm less than comfortable with but I'm trying to keep an open mind and believe that I am wise enough to make careful considerations regarding this . I have a failed business in my past due to grave mistake caused by inexperience and displaced enthusiasm. I'm not bitter about this but it was always my hope to go it alone next time.

I'm beginning correspondence with an organization called SCORE soon. So I may get some answers about locating funds for the business. But I wanted to put it to the board as a question of finding start up cash either as business partners or loans. Or any past experience of others, or ideas I may not have thought of.

Please save the comments about my ignorance or education level. I have no interest in having that evaluated. This is a strictly financial and creative financing line of questioning.

Thanks for anyone that gives assistance.

britboy
Posts: 2083
Platinum Member

Posted: Wednesday, December 31, 2003 2:47:00 PM

Hi AJ, SCORE is a group of retired persons often with business backgrounds who volunteer to help small businesspersons with problems. Unfortunately, it's often financial problems that are the hardest to answer. They will usually be able to steer you to a local bank who will be happy to give you a loan as the government will be responsible for a large percentage of the money if you don't pay. However, these loans must be for rather more money than most hairstylists and prospective salon owners want to get into, e.g.$150,000, and here's the bad news, you must have collateral to put up for the loan, e.g. your home...I'd be surprised if they can be very helpful other than that, it seems to me that they are actually there more as go-betweens to the banks than actual help in other ways, at least that was my inmpression when I spoke with them some years ago. I'd be interested to hear how it goes for you with them though.
I guess I'm wondering why you feel the need to open up such a fancy and expensive salon. Do you have a clientel of your own that generates over $150,000 gross per year? I believe that unless you do, you'd be better off working for somebody else and saving your money. The hardest thing today is to get staff, and although I realize that you know people who's work you like, the question is, will they come to work for you? It's your money in there, so unless you have a very firm comittment from them, I'd be scared that on opening day I'd be alone, or at best with a staff of folks who have half a clientel, or none at all, in which case they would be a big drain on your resources, both client-wise and of course financial. I'm just playing devil's advocate here, not pooh-pooing your dreams, but I'd far rather see you earning a good living ($50,000 plus, (net) in another salon than putting all your resources and money into what might be a risky proposition. Good luck to you whatever you decide, and Happy New Year...

m2
Posts: 1103
Platinum Member

Posted: Thursday, January 01, 2004 7:47:00 AM

AJ good for you and your dream-I think we all must have them! Where would we get goals and aspirations without them? Dreams enable our ideas and creativity etc. Britboy has great advice and thoughts here. Small Biz Loan is a way to start financially. Usually there are classes on starting a small biz for free (or close to it) that would give you invaluable info and help you lay groundwork for your new place. Get everything down on paper and advice from every available outlet (which sounds like you are doing already-SCORE and this board) then you can see it plotted out before you so you'll know more exactly where you're going. It's easier to stay on goal if it's there to see each day. Plot the progress! Good Luck to you!

AJ
Posts: 4

Posted: Thursday, January 01, 2004 11:25:00 AM

Thanks to you both for the advice.

Like I said the plan is expensive (not astronomical but expensive for me) and I need to look into other sources of money.

Working for someone else is not what I want to do with the rest of my career. For one thing most salons do not meet their potential, for themselves or their stylists. I'm not in any position to make decisions or changes in that environment. Salon ownership is as much about creative business as it is anything else and this is where my love is. To me having my own business is the best way to profit from my knowledge and instincts. For instance, how can I convince my boss to choose a better more adventageious location, or invest in non traditional retail offerings, why would he spend alot of money just because I suggested it? The best way to take advantage of my ideas is to impliment them in the role of a business owner. Working for others is just doing the same old thing, collecting a paycheck and having little to do with operations and benefiting the least from creative changes.

Working for someone else on the other hand is probably best, if I find that I cannot find ways to afford to do it the way I would like to. Like if I find that I can't afford a good location or to fill 50% space with retail or any sufficient amount of space. Or I can comprimise and do things the same way everyone else has been doing it for ages. I'm sure alot of successful salon owners today didn't open their salons as a big deal in the very beginning. Maybe I do need to go back and think about it. I think I get very nervous when I look at people who do it right and people that do it wrong. I think I must have this or that but maybe I need to look at the whole thing progresively. I just know from experience how much money a business eats, and I think if I don't do it right away it could be a very long time before I have cash to add elements. The elements that I'd like to start with are things I think will potentially make more money vs. other salons or a salon in a less visible location.

Anyway thank you for your advice, I'm going to give more thought to my whole plan and also consider some less expensive locations. I think I've had a one track mind for a little while now and need to get some other ideas flowing.

britboy
Posts: 2083
Platinum Member

Posted: Friday, January 02, 2004 12:40:00 AM

AJ... remember that the 50% of space that you want to fill with retail products will have to be paid for up-front at first until your suppliers know you, and then on a monthly basis, with 18% interest annually on what you owe. Can you pay retail commissions, pay for the bags or sacks that you'll want to put the product into, plus a sheet or two of tissue paper to make it look nice plus a printed label (or printed bags) and 18% interest and still make money?

m2
Posts: 1103
Platinum Member

Posted: Friday, January 02, 2004 6:02:00 AM

AJ-you can definitely remain with your plan and begin on smaller scale-nothing wrong about that! Dream big-start a bit smaller-go for it!!!!!!

Anonymous

Posted: Friday, January 02, 2004 8:55:00 AM

Choose the most important elements of your plan and focus on ways to implement them in a slightly smaller scale, maybe. (I'm no business expert, but just using my own instincts). If you can't afford the "best" location, check out the second and third best. Then determine the minimum space required to be able to maximize your retail and service areas. And how many employees do you need minimum to get started. Then work on a long-term plan of expansion (maybe prioritizing the most important changes and aiming for them: is it location, increased size, increased employees, more retail products?) Eventually, as you make money, you can slowly expand. I remember most of the successful businesses in my town started out in a smaller, less visible location and moved in a few years to their current wonderful spots, remodeling and expanding on the way.

You can do it.

Anonymous

Posted: Wednesday, April 07, 2004 8:05:00 PM

AJ, what part of the country are you in?

Remember that no soldier ever won a battle by just siting in his tent, thinking about it and making some moves is half the effort. The fact that you have allready tasted some failure will only make you a better decision maker in the future.

Anonymous

Posted: Wednesday, April 07, 2004 8:09:00 PM

Another thing AJ, based on past experience, location and marketing are paramount.
You can be giving away gold by the pound, if folks don't know you are there you can be dead in the water.
If you can't doit right, wait until you can.

Anonymous

Posted: Thursday, April 08, 2004 7:40:00 AM

AJ - Here is how you do it. First be 100% sure this is what you want. Perfect your plan and dream. The Key is it is your dream. Not everyone sees your dream. Now write out that plan and dream on a business plan along with whatever assets - include how you intend to finance this. Now comes the work - First take this plan to your banker - DO NOT WALK IN ALL WIMPY WITH YOUR TAIL TUCKED BETWEEN YOUR LEGS - BEGGING FOR MONEY! - Walk in with your head up - believe in yourself and your vision and plan - you must sell this to the loan officer - LIKE A CARSALESMAN WOULD SELL YOU A USED CAR! - If you go in asking for a loan and they hand you a loan application - you are waisting your time at that bank - go to the next bank - WALK IN LIKE YOU OWN THE BANK - TELL THEM WHAT YOU ARE GOING TO DO AND WHERE YOU WILL BE IN 2 - 5 - 10 YEARS - HELP THEM CATCH YOUR VISION - if they do not want to play - then move to the next bank! The trick is you are selling them your vision - not just borrowing money from them...

britboy
Posts: 2083
Platinum Member

Posted: Thursday, April 08, 2004 6:54:00 PM

It doesn't really matter how you walk in to the bank, as long as you have something to put up as a guarantee on the loan (your house e.g.) they will lend you money...
If you don't, they won't...simple as that!

mc
Posts: 2360
Platinum Member

Posted: Thursday, April 08, 2004 7:04:00 PM

What banks going to give you money just because you have a vision?

alesia
Posts: 1920
Platinum Member

Posted: Friday, April 09, 2004 3:52:00 AM

in this order you need to check out with the bank.
1: have good credit report 2: have collateral that is worth as much or more than loan amount.

if you are not accepted to take a loan from them and you really feel they made an error, you can then appeal to the branch manager of the bank.
if the branch manager agrees with you, they will then appeal to the bank for you.
this still won't be a guarentee but it will be a second chance.

you do need an air of confidence but do not come off as a cocky butthead. you should have it in your head that they should be proud that you walked into their bank but remember to treat them like the humans that they are. come in with your paperwork neat and show your numbers. you don't have to dramatically sell them your vision, but show them you do have a workable plan.

NiceAnon
Posts: 277
Bronze Member

Posted: Friday, April 09, 2004 4:28:00 AM

Banks aren't the only place to find financing for a startup. Private investors can help, as well as your local city council. Many have a fund reserve for people to go to for help in starting a business that will help increase community development. Also, have you checked with the Small Business Administration? Write up a sound business plan and cover all points. You can run a search on the internet and come up with a wealth of information and financing advice, as well as business advice. It's worth it to check these avenues out. If you are serious about what you want, you will find a way that works best for you. Good luck in your new endeavor!

alesia
Posts: 1920
Platinum Member

Posted: Friday, April 09, 2004 8:20:00 AM

excellent advice niceanon.

Anonymous

Posted: Friday, April 09, 2004 10:30:00 AM

Well - some banks will loan money without collateralizing - We have a 100,000 credit line available to us - do we use it - no. We sold our rental property to finance our salon. But you have to start somewhere. With good credit, some assets, some capitol of your own, equipment to collaterlize - and maybe if you swing a dr_g deal or two - youll be in business.

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