The Aging Salon/Spa Business Model

January 9, 2017 | By Neil Ducoff | 1 Comment

The aging salon/spa business model

The closing of The Ted Gibson Salon in New York City just days before Christmas has fueled the debate that the salon/spa industry has officially entered an era of dramatic change.

Ted Gibson is a GREAT stylist … one I have admired for years.

Gibson said in the Modern Salon interview, “We were open for six years before we had our first walkout, then we had one four years later, then another two years later and one back in September.”

That’s four walkouts over thirteen years.

Clearly, Ted Gibson’s celebrity work, the Ted Gibson Artistic Team, the Ted Gibson Academy and his new product company pulled his attention away from the salon.

Many busy platform artist/owners experience business issues because they become too disconnected from their companies.

Gibson’s partner, Jason Backe says, “The smallest piece of our business, the salon, was taking up all of our time, energy and money.”

Many owners are interpreting the closing of the Ted Gibson Salon closing as a bad omen for the industry. Some are calling it “scary.”

There is NO reason for independent employee-based salons to view Ted Gibson’s Salon closing as “scary.”

  • Their approach to salon ownership and leadership wasn’t working.
  • The salon was sapping their energy, time and money.
  • It wasn’t where their passion and interests were.
  • Four walkouts make all of the above pretty obvious.

The BIGGER lessons for employee-based salons/spas:

  • Because of the labor-intensive nature of the salon/spa business, getting the culture right and keeping it right is relentless work. Hiring right, training, performance reviews, maintaining standards, client retention … and sound fiscal management … cannot be compromised.
    LESSON: Are you truly committing the time and attention to leadership responsibilities that your salon/spa company demands?
  • Employees (stylists or any employees in any company in any industry) hitch themselves to the company’s vision, values and its sense of purpose. In an entrepreneurial company like a salon/spa … it’s the owner/leader that embodies the vision and what the company stands for.
    LESSON: If you are no longer passionate about the business you created … why should your employees be? If you don’t want to be there … why would your employees want to work there? If you lost employees to booth rental or suites … maybe you made working alone look better than working in your company? Get the connection?
  • Leaders must always be the first to change their thinking and behavior. For many, leading Millennials means finding a different way to connect and lead others to achieve great things. The more inflexible a leader’s thinking … the more untapped the potential of this group labeled Millennials.
    LESSON: Stop blaming Millennials because you’re stuck in your approach to leadership. Just like every other generation, Millennials have amazing potential and it’s the leader’s responsibility to figure out how to unleash it.
  • Yes, the old commission “build your own book” business model is doing more damage to employee-based salons than Millennials, booth rental or suites can ever do. Commission is about volume, getting a piece of every ticket and growing individuals … or as I like to say, “growing columns on the appointment book.”
    LESSON: If you pay “I/me/mine” … you get “I/me/mine.” Don’t argue with me when it’s the outcome of commission that you don’t like in your business.
  • Grow your brand. Create that team-based culture that owners talk a lot about but the old commission model cannot achieve. Create those career opportunities that truly attract and retain great talent. Create those extraordinary customer service experiences. Create those cultures that you admire in Disney, Starbucks, Southwest Airlines and all those “Good to Great” companies. That’s the next evolution of the salon/spa business model.
    LESSON: Changing a commission-based business model to a team-based business model is a process that goes far beyond the method of compensation. You need to learn a new way of leading people, inspiring and measuring performance. It’s work … but it’s the work that produces consistent performance and a stable financial reality. RELATED: Download our free Team-Based Pay White Paper Report here.
  • If you refuse to change … its scary.
    LESSON: If you’ve ever uttered the words, “It won’t work,” or, “That’s not the way it’s done,” you’re clinging to an aging business model. Change is all around you … embrace it. What’s the worse that could happen? What’s your company’s long-term outlook if you don’t change?

Here’s my challenge to you: You can blame the schools, booth rental, suites, industry associations, manufacturers and Millennials … the only truly viable way to turn this industry around is for owners to do the work of growing extraordinary companies that offer true career paths (not just build your book).

  • To build a true team-based brand that earns client loyalty rather than one chair earning “their” client’s loyalty.
  • To provide the ground-up education programs.
  • To stop paying the “I/me/mine” commissions and sliding scales and service charges that feed the independent contractor mentality.
  • To understand your financials and how to manage cash flow to create profit.
  • To stop paying unreported wages.
  • To stop misclassifying workers as 1099 when you treat them like employees.
  • To tax tip income because the IRS says “Tips are income earned at work and taxable.”
  • To embrace systems, leadership and how to create the team-based cultures all owners want but don’t do the work that’s required.

It’s time for the salon industry to grow up and truly earn the right to be called “Professional.” That’s the fight I’ve been fighting for over 35 years and am proudly making a difference. We have the data to prove it works.

Owners ... Make 2017 the year you take back control of your companies.

Categories: Leadership , Monday Morning Wake-Up

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