June 2012

Lisa Kind - Editor

Esthetic Endeavors | by Judith Culp


What Independent Means to an Esthetician

The licensing program in most states prepares a person to pass a state test and demonstrate they are competent to perform services on the public with minimal risk to the consumer.

Historically, cosmetologists graduated and went to work for someone who taught them the ropes.

When licensure was established it used this as a guide and the programs were designed for entry level positions where this could occur.

What is most often missed is that there are few entry level positions available to estheticians. What the consumer expects them to do includes many services that are not taught at this basic level. Business classes in the basic program are geared to getting the graduate ready for this entry level position – as an employee. There simply is not enough time to teach how to go into business for oneself.

For stylists and nail specialists this is not an issue as they can readily find the entry level jobs and start to hone their skill sets. For estheticians it is another story.

Business owners fear having to pay out more than the technician is actually bringing into the business when all the costs are on the table. They fear spending time and money training a technician and building them to be profitable only to have that technician announce, "I'm going into business for myself so I can make more money."

This very statement demonstrates that the person does not understand all that goes into being an independent contractor in business for themselves.

Those who have been in business for themselves know there is no free bonus. There are many extra responsibilities and risks for any benefit that may be gained. It is no longer an eight hour job that can be walked away from at the end of the day.

The responsibilities of lease negotiation, supplies, inventory, taxes, marketing, cleaning, scheduling, and bookkeeping are all added on top of performing services. Estheticians, especially those new to the industry are justifiably concerned about taking on this responsibility and the associated capital investment. But too often renting a room and starting their own business is the only option available to them.

The understanding of IRS terminology and definitions of workers continues to be a cloud that hangs over the industry. All industry professionals need to be familiar with the information in IRS publication 4143 – Cosmetology – Learning the Art of Doing Business.

This is a Federal Taxation Curriculum for those specifically in the cosmetology field. It is clear and complete. With less than 40 pages it can be printed off the IRS website: www.irs.gov free of charge. Chapter 2 covers "worker classifications". Do you know the difference between a "booth renter" and an "independent contractor?"

You'll find it here. Booth renters may be classified as employees where independent contractors are always self –employed. The booklet discusses everything you need to know to operate your business in a manner to keep you out of trouble with the IRS.

But the IRS is not the only ruling body we have to be prepared to deal with. Many states also collect taxes from income. Most of the time, they use the IRS guidelines. However, this is not the case with the representatives of the state board of workers compensation.

They have much tougher guidelines for what makes an independent business person. This is the agency that gets involved if there is a work related injury. Recently at an Oregon Board of Cosmetology meeting, a representative from this agency, the Dept. of Consumer & Business Services, gave a presentation on what they look for. ANY form of guidance or direction, including a central pricelist for services, can throw the entire facility into that of employer and employees.

It is crucial information for anyone who is thinking of renting booths or having independent contractors. Their fines and penalties are far, far greater than any that the IRS hands out.

If you are going to become an independent contractor and sublease space within another facility (or freestanding on your own,) here are three questions you need to be able to answer, because you need a business plan. If you don't have a plan to succeed, you are creating a high risk of failure scenario.

Do you have the skill sets for the services your target market will be requesting? If you are fresh out of a basic program, your best bet may be to take additional training. Most salons do not want to hire a new graduate because of what they don't know. They want someone trained and ready to work. How long will this take? Probably equivalent in time to what you spent in the basic program.

It takes time to learn to do the diversity of services and practice them so you gain confidence and skill. Taking a day class in microdermabrasion will probably get you theory and then all of the participants will give and receive a service. Giving one service does not make you competent in that procedure. It opens the door.

The skin you worked on in that workshop won't cover all the different issues you may be presented with in a real life working environment. Advanced topics you need training in will vary with the target market you want to work with. Visit www.ncea.tv for the advanced job task analysis – what an esthetician really needs to know: http://ncea.tv/esthetician-job-task-1200-hours. This is on top of the basic program.

Do you have business training? You will need to learn how to read and prepare an income statement, balance checkbooks, track business income and expenses, handle tax payments, negotiate a lease – and assure it is properly documented. You will be investing in products, fixtures and equipment. You need to be able to create guidelines to evaluate which products and equipment are the most suitable for you at that time and place. Often the cheapest route is not the best one to take.

Even if you are working alone, you will need to establish good business policies for your clients – this means you will need to actually write them down. Planning on using the internet? More "how to" classes will save you much grief. Most community colleges have ongoing classes for small businesses. It is never too soon or too late to start taking these. If your long term goals include clinic or spa ownership then even more classes are needed for operations, employee management and marketing. Community colleges, business books from Milady or Allured Publishing, or joining ISPA to tap into their salon management expertise are all important resources to tap into.

I had used computerized software for my personal accounting, but learning QuickBooks required an online class and attending one of their roving workshops. You also need to be able to discover your break-even point and create a plan to achieve and maintain income above it.

I love using the internet to promote my business, but even a simple webpage requires lots of thought and involvement both initially and ongoing. No one knows your business goals like you do. You will have to supply the verbiage, what will be said, images, and the goals.

Is this the right time in your life? Owning your own business takes a lot of extra hours work. If you have young children or a lot of personal time requirements, then running a business may not be your best option and could cause terrific stress. Your job description becomes: perform esthetic services, cleaning, shop for supplies, maintain adequate inventory but don't over buy; do the accounting, plan and execute the marketing.

Marketing is HUGE in its time demands to say nothing of money. And you may have several forms of marketing that you are using at the same time including brochures, website, Facebook, coupons, flyers, service bonus cards, etc. For most new businesses, you will be doing this yourself to save money. More work for you to get done and it can be daunting. Once your business is set up, then like having a child, it requires continual maintenance, evaluation and change as necessary to achieve your success goals..

Estheticians who are independent contractors must be in control of all the details of their business setup and operations. They must put themselves on the line with a financial investment in their business and assume all the responsibilities and risks associated with the growth and success of their business. They must be committed to ongoing education to continually improve both their technical and business skills.

Judith Culp, has been in the esthetics industry since 1980. She is the owner of NW Institute of Esthetics, Inc. and contributing editor for Miladys Standard Esthetics: Advanced and lead author of Esthetician's Guide to Client Safety & Wellness. For more information visit www.estheticsnw.com.