Chapter 2 Business Basics

Chapter 2 Business Basics

Job Search

Career Building

Retailing

Business Ownership

Job Search

• Finding a Job

• Evaluating the Salon

Finding a Job (methods)

• talk to employed nail technicians

• investigate web sites

• talk to distributors sales consultants

• check classified sections

• refer to school's bulletin board

• call or visit spas and salons

• mail out resume with cover letter.

Finding a Job (resume)

• Resume is a one or two page outline that lists your educational history, work experience, additional skills and achievements.

• Resume components are: - personal data, -- educational background, --- additional training, ---- previous employment, ----- special skills, ------ special awards, ------- references, -------interests, ---------objectives.

Finding a Job (cover letter)

• It is a necessary companion to resume.

• introduces you to prospective employer

• offers brief summary of why you would like to be employed at a salon or spa

• provides brief description of quilities

Finding a Job (job interview)

• Stay calm and be yourself

• take a moment to think before answering

• properly prepare: role-play with friends and family

• dress well

• arrive on time

• be prepared to demonstrate technical and communication skills

Evaluating the Salon (work environment)

• what are the specific job responsibilities?

• how large is the salon staff? how long have they been with you?

• how many new nail technicians have joined the staff in the last year?

• what benefits are offered to employees (medical insurance, retirement, paid holidays, educational advancement, paid continuing education units.

Evaluating the Salon (compensation)

• commission (based on % of dollar income generated by serving clients( (most common is 50/50 40/60

• salary (set income on weekly or monthly basis)

• salary + commission (guarantees set income, plus additional income when goal is met)

Evaluating the Salon (job benefits)

• educational seminars

• sales commission

• paid holidays, vacations, bonuses

• number of sick days

• insurance benefits

• retirement plan

• travel and advancement opportunities

Career Building

• Professional Relationship

• Building a Clientele

• Lifelong Learning

Professional Relationship

• Networking is developing relationships with individuals who can put you in contact with customers or employers. Important to maintain professional relationship with fellow students and peers. ​

• Customer service is a personal attention to the needs of clients and a concern for their well-being

Building a Clientele

• Marketing is creating awareness of a product or service.

Techniques for bringing in new clients are:

• Word of mouth (most effective way to build clientele)

• Business Cards (keep cards on hand and give them to current and potential clients)

• Rebooking (ask clients to make future appointments before they leave. Also known as pre-booking)

• Promotional Literature (distribute flyers, newsletters, and postcards. Complete menu of service you provide)

Lifelong Learning

• Make a commitment to lifelong learning to keep informed about the latest products, innovative treatments, new technologies and industry trends.

• Ways to continue education are:

• Comparison Shopping ( visit competitors to compare their business practices to your own; compare how they market and sell their products and services; how they book clients and how they ensure quality)

• Internet Resources (starting point to learn more about the quickly changing nail industry)

• Seminars and trade shows etc

Retailing

• Professional Recommendation

• Motivating Buyers

• Sales Promotions

Professional Recommendation

• Retailing is recommending the best products for client purchase, which benefits the nail technician as well.

• Persuading clients :

1. Trust abilities, services, credibility and professionalism

2. Depend on products that you believe to be of the finest quality

3. Understand importance of commitment to home care for results.

• Professional products should be demonstrated for use and informed of it's effectiveness.

• During service, tell client what you are using and why. Inform clients about proper product choices throughout the service.

Motivating Buyers

• Need (- want or necessity, -- easiest buyer motivation to recognize, ---make buyer aware of products that can benefit them)

• Profit (-also referred to as "gain", -- client believes he or she is making intelligent purchase)

• Impulse Buying (- making a spur-of-the-moment decision to buy something, -- accounts for 45-65% of all purchase)

Sales Promotions

• It serves as important tools for short- and long-term benefits for your business

• Can be cost-effective; attract new clients quickly; help reduce overstocked inventories; announce new services and products)

Sales Promotions

Types of sales promotions are:

• Gift-with-purchase ( receive free or discounted product or service with purchase of full price service)

• Holiday and Seasonal Promotions (dozens of holidays throughout the year are great time to run promotions)

• Monthly Promotions ( special kits or gift packs allow clients to try new items or give as gifts)

• Referral Promotions (if a client refer a friend who comes in for a service, client receives discount)

• Effective Displays (use floor and wall space and imagination to display retail merchandise to create interest and excitement

Business Ownership

• Business Essentials

• Plans for a successful salon

• Expenses and Income

• Nail Salon Philosophy, Policies and Procedures

Business Essentials

• Business Plan is a central company document you and your employees use to make decisions.

• Types of Business Ownerships are:

• Sole Proprietorship (owned by 1 person in complete control; receives all profits; responsible for all debts and losses)

• Partnership ( owned by 2 people)

• Corporation (owned by shareholders; legal entity separate from its members)

• Franchise (license for operation; operating agreement)

Plans for a successful salon

• Important factors to consider:

• Location (most important factor; parking conditions, high-traffic activity, rental fees per sq. ft.)

• Market Need (how many other salons and nail technicians in the area?; obtain 10-year forecast)

• Cost of Necessary Improvements (amount of money to be spent on unique needs; plumbing, electrical, etc)

Plans for a successful salon

• Floor Plans should have 2 primary goals :

1. Designed to function smoothly and efficiently

2. Overall visual appeal or emotional impact should be pleasant)

• Equipment are determined by the type of services you want to offer your clients.

• Basic equipment: manicure table, pedicure basin, technician stools and storage cabinets, chairs for clients, smaller tools such as table lamps and disinfection containers.

Plans for a successful salon

• To borrow money from the bank you must present many documents such as "profit and loss projection"

• After you borrow money from the bank, you must establish a track record.

• Track record is a good relationship with your bank.

• Once you have a track record with your bank, you will be able to get a line of credit from the bank.

• Line of credit provides a reserve of cash that you can draw upon to meet needed operating expenses if you have a slow month or two. It is advisable to pay money you borrow from line of credit back as quickly as possible.

Plans for a successful salon

• Rental agreements is also called leases; normally extend for 5 years with an option for 5 more years.

• Basic Landlord Services may include maintenance to building; repairs to facility; adequate water capacity and pressure; late night and/or weekend access to building.

• 2 types of rental agreements are:

• Fixed rent is a set dollar amount paid each month to the lesser; allows you to predict monthly expenses.

• Variable rent is a set dollar amount paid per month plus percentage of total monthly income. Common in malls and large shopping centers. Don't sign lease until you are satisfied that it is a fair deal.

Plans for a successful salon

• You must also have insurance which will protect you from financial difficulties; known as a risk management.

• Common insurances are:

• Malpractice ( protects the salon owner from financial loss resulting from negligence; owner must insure each technician in the salon; covers cost of a lawsuit or settlement resulting from damage inflicted on a client)

• Property or Premise ( covers the actual salon equipment and physical location; covers replacement of lost items and carries liability clauses that will pay claim if someone is injured on the premises)

Plans for a successful salon

• Product liability (protects salon distributors and manufacturers from lawsuit due to misuse; some companies require an educational program in product knowledge before granting)

• Worker's compensation ( state controlled and required by law; paid directly to state on quarterly basis; covers any expenses resulting from injury to an employee)

Expenses and Income

• Income is all payments received from clients for services and products. Accountants refer it as revenue.

• Operating Expenses (OE) are all costs incurred in day-to-day running of salon.

• Fixed expenses/costs do not change from month to month for at least one year, for example: rent, salaries and insurance.

• Variable expenses/costs change on a monthly basis, for example: utilities, supplies, promotions, postage and tax.

Expenses and Income

• A business owner is responsible for promptly paying local and federal government taxes.

• For withholding tax, owner keeps a percentage of funds from employee's income for paying government federal, state and local taxes and social security tax.

• Social Security is a planned savings/retirement fund for every worker in the U.S.; includes Medicare (provides medical insurance coverage during retirement)

• W-2 Form must be provided by salon owner for each employee, indicating all taxes paid for the past year.

Expenses and Income

• To charge sales tax, you must apply for a sales tax permit before collecting sales tax on items or services; fill out resale certificate and provide tax ID number - won't have to pay tax to seller.

• Income tax must be on the profits (earnings) of a business.

• INCOME - EXPENSE= PROFIT

Nail Salon Philosophy, Policies and Procedures

• A salon should have a professional philosophy or standard of ethics. The first step in developing these standards, a salon may create Policies and Procedures Handbook. This handbook will inform employees about what to expect from management.

• Record keeping is important for a salon, as it keeps accurate records for tax purposes. Full-or-part-time bookkeeper can keep financial records.

Nail Salon Philosophy, Policies and Procedures

• Inventory is all products purchased for use during services and for retailing; stock in quantity.

• Inventory control is procedures used to ensure that products are accounted for from purchase to use; owners or managers establish guidelines.

• Primary functions of a receptionist duties are to greet each person with a smile, schedule appointments in fair and efficient way, manage incoming and outgoing calls and work with nail technicians to ensure proper time allocation.

• Appointments are scheduled according to type of service and speed of nail technician.

Nail Salon Philosophy, Policies and Procedures

• Advertising incorporates all activities that attract attention to your salon or spa and create a positive impression.

• Best form of advertising is word-of-mouth.

• Most selective form is direct mail.

• Magazines or periodicals that reach clientele you are trying to attract

• Internet banner ads or own Web sites

• Survey clients once a year for opinions.

Nail Salon Philosophy, Policies and Procedures

• Public relations is relating to the public. Involvement in community affairs.

• Make lists of media contacts; come up with story idea; write it down and send it along with photos or other support materials.

• Promotion calendar is the best way to ensure an effective advertising and promotion campaign. Establish deadlines for yourself. Plan promotion around special events, new products and services.