There’s more to the booth rental business model than meets the eye, so we’ve compiled the many pros and cons here for stylists and salon owners!
Booth rental continues to gain market share as a popular alternative to salary or commission-based employment, but there are some advantages and disadvantages that both stylists and salon owners need to consider before making the switch.
Stylists value the independence of booth rental but are sometimes put off by managing the many facets of their business. Similarly, salon owners enjoy the increased business chair rentals bring in, but have a tough time relinquishing control over some aspects of the business.
Advantages to Booth Rental From the Stylist’s Perspective:
The primary reasons why stylists are attracted to the booth rental model is for the independence and earning potential the job offers over traditional employment.
Booth renters are considered independent contractors in the eyes of the law. This means they are in control of their business and do not have to meet many of the obligations that come along with being an actual employee.
Stylists can set their schedules, choose the products they use, and essentially run their business how they’d like, without the headaches of owning a salon. Booth renting in a salon means that building maintenance, property taxes, and employee management are all taken care of, leaving stylists to focus on what they do best.
Stylists have the potential to earn as much as they want in a booth rental setting as well; once they cover the rental fee, the rest of their earnings belong to them. However, this comes with a major caveat: Earnings work both ways in this business model. Stylists not willing to build a clientele may be better off as a traditional employee.
Disadvantages to Booth Rental From the Stylist’s Perspective:
Booth rental also comes with its fair share of disadvantages that are not always apparent at first glance. Misleading marketing information from salon suite businesses often glamorizes booth rental, promising more money for less work. Unfortunately, these businesses tend to omit the realities that accompany this approach.
Total Business Responsibility
Stylists renting a booth are wholly responsible for the success of their business, and this comes with a lot of unseen responsibilities. Stylists must handle client acquisition, accounting, taxes, and more, on their own. They are also responsible for styling tools and supplies, liability insurance, proper licensing, and other obligations governing independent contractors.
As an independent contractor, stylists lose the benefits and perks that typically follow in a traditional employment setting. Stylists become responsible for their retirement plan, health insurance, and education. They also lack the mentorship from an employer-employee relationship.
Independently contracted stylists also generally have less stability and security; they do not have the luxury of relying on a salon to continue bringing in clientele and growing the business. Stylists without a well-established clientele typically have to hustle for a long time before they have a stable cash flow.
Advantages From the Salon Owner’s Perspective:
There are several reasons why the booth rental model is attractive to salon owners:
Salon owners that utilize a booth rental model can give up many of the costs associated with salary or commission-based employees. Since they are hiring independent contractors, salon owners are not responsible for handling each stylist’s taxes, healthcare, continuing education, retirement plans, or other commitments that come along with full-time employees. This also reduces a significant amount of administrative work.
The booth rental model can also increase business. Since stylists are more responsible for their success, they are typically working to bring in as many clients as possible. This translates into a high-volume business.
In addition, salon owners can rely on the monthly rent contributed by each booth, giving them some stability and taking some of the pressure of bringing in business off their shoulders.
While salon owners do have to grapple with competitive rental rates, they can generally worry less about stylist turnover. Independent contractors are already on their own and won’t be tempted to leave and start their own business, or go to a salon with a better commission.
Disadvantages From the Salon Owner’s Perspective:
As a salon owner, there are also several disadvantages to the booth rental approach:
Salon owners have significantly less control over independent contractors. Contractors can set their hours, use their own products, dress how they like, and generally run their business as they see fit. This is their right, and as an independent contractor, they cannot be treated as an employee by legal obligation.
As a result, salon owners must relinquish control of many aspects of the business.
While employees are committed to the success of the salon, independent contractors are ultimately concerned with the success of their business. This can create discord or even excessive competition among stylists.
Struggle for Balance
Salon owners must also try to fairly balance the overall responsibilities of the salon, managing common areas, cleanliness expectations, and more. This can be a challenge when working with several different businesses under one roof.
Similarly, salon owners may also struggle to maintain a consistent brand and atmosphere across the diverse styles and practices of the stylists.
Salon owners face a competitive chair rental market, which typically keeps rental fees low.
Salons want to attract top talent, so many will offer incentives to bring in stylists, which can further cut into profit margins and tempt renters to move on.
The booth rental business model is an excellent fit for many stylists and salon owners, but it is not right for everyone. Salon owners and stylists alike should consider the pros and cons of each approach to determine which business model best suits their goals.
It’s also important to recognize that not all states permit booth rental, so it is not an option for everyone. Check state regulations before considering a switch.
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