April 2009

Charlene Abretske

Beauty Business Buzz | Charlene Abretske

 

Weighing Your Options: Choosing Booth Rental or Commission

Don’t we all want the best deals, results, and returns on our investments when it comes to our money, time and effort?

Of course we do, and that is what leads us to the age old question in the beauty industry, “booth rental or commission?”

It is like asking “Which comes first, the chicken or the egg?” We like to think there is one answer. Now here is the fun part; there is no right or wrong answer on which is a better choice!

In all the years I have been working with professionals in the salon industry I have yet to find which is the better or best answer. What I recommend is to get as real and honest as you can about what you hope to gain by asking yourself this question and answer honestly: “What are you willing to invest, not just your time and money, but in your blood, sweat and tears?”

Here are some more questions you need to ask before making a choice between booth rental or commission.

Questions for Salon Owners

For salon owners begin by asking the following questions:

You must realize that owning a booth rental salon is not for you if:

Many times salon owners will create a “hybrid” type of salon where the relationship between the parties fall into a grey area and it contains aspects of booth rental salons and employee/commission based salons that work for them and those who work there, thinking they have created a win/win situation.

This is extremely dangerous territory to tread on. The IRS sees this in either black or white, leaving absolutely no room for grey. Very specific guidelines have been created clearly laying out the rules on what the standards are and what the relationship of parties should be.

When the standards are violated it can open up not only you, but those who work in your business to owing large amounts taxes and penalties, the loss of your business and even criminal charges. If you need to find out what the guidelines are visit www.irs.gov for a complete list.

Questions for Booth Renters

For technicians begin by asking yourself the following questions:

Being a booth renter is not for you if:

When you are managing your booth rental business you will have less time to work from the chair if you are managing all the aspects you need to in order to be successful. If you do not have the time to manage everything yourself you will be paying the salon owner or other service providers, for managing many of the items you need in order to run a business from your chair.

You will also be responsible to Uncle Sam for you tax payments and will not see 100 percent of the money generated from your chair. Many individuals choose booth rental because they “don’t want to be told what to do,” please note holding yourself accountable for all aspects of your business is extremely challenging for even the most organized of us and can be daunting and discouraging to maintain without the help you need to succeed. Being a successful booth renter requires more than great technical talent, it requires serious rigorous discipline to be done effectively over a long period of time.

The biggest positive of this whole situation is you have choices and when you are honest with yourself about your self-expectations, making those choices becomes so much easier.

Charlene Abretske is a business advisor with Your Beauty Network and supports salons and spas with growing their businesses through on demand back office tools designed for beauty professionals. For more information about how Your Beauty Network can help, call toll free (866)364-4926 or email info@iybn.com.