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Opening a Second Salon

Opening a Second Salon

KEN'S CLINIC - OPENING A SECOND SALON

"If someone is thinking of opening a second salon, what advice would you give them?"

Melissa Timperley, Melissa Timperley Salon

KEN’S DIAGNOSIS

"This is a super question Melissa and one that has an apparently simple and yetcomplex answer. ‘Expand when you are ready to’. So why is that simple and yet complex? Well, far too often salon owners open a second salon for the wrong reason – ego! Many of us want to grow but big does not always mean beautiful. I know many salon owners who make a fabulous living out of one beautifully formed salon.

The right prices, the perfect team, a wonderful clientele and more importantly a healthy profit margin. Ego is not a bad thing but sometimes it can lead you to make rash decisions, especially when faced with what looks like an opportunity. A business for sale, an empty unit to let, they can be very tempting. So when is it right to grow? Well it’s a bit like life really, we move when our existinghouse is too small or when those we love feel the time is right to leave home and we decide to grow with them. If your salon is too busy and your team utilisation numbers are too high, then the time could be right to look for a bigger or second ‘home’. But just like moving home, make sure you can afford it. Opening a salon is expensive.

You need two things, start-up capital and working capital. Your first salon should ideally be producing enough surplus cash to tide you over the initial start-up period that any salon has. It will probably take three to six months before you have an income near to your breakeven point. Larger salon groups often plan for much longer. Rent, rates, overheads and guaranteed salaries all have to be paid from somewhere, and cash flow in a new salon is always a challenge.

Splitting your existing team to man a new salon can often mean twice the overheads with the same total income. However, if you have ‘children ready to leave home’, it is far better to combine your talents to provide an opportunity for an amazing stylist than to lose them completely. This would of course require their financial commitment and therefore a share of the potential risk to make this happen. Expansion is exciting and I would hate to pour cold water onto anyone’s dreams, but I have also been saddened by seeing someone lose everything they had worked for by expanding too soon."

This article originally appeared in Creative Head, where Ken has a monthly clinic.

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Posted in: Business Building