Booth Rental Guide for Salon Owner and Stylists

There are multiple ways to run a salon business. The owner can rent or buy a space and hire employees who work for a set wage. Or they can set up a salon booth rental arrangement. The latter option provides some unique benefits both for business owners and those who rent the space. The following post is your complete guide for finding a booth and/or renting booths to stylists.

What is Booth Rental?

With a booth rental salon, the salon owner simply rents chairs to other licensed cosmetologists instead of hiring them to work for a set wage. The owner gets the profits from renting the space. And those who rent the space essentially run their own business within the larger salon. They can set their own schedule and are responsible for their own marketing and client management. But they benefit from having the space and amenities of the established salon.

How Much does Booth Rental Cost?

The exact cost of salon booth rental varies based on the salon’s location and the type of amenities offered. The average cost falls around $400 to $600 per month. However, salons in upscale neighborhoods and high traffic areas like Manhattan may charge thousands per month. And salons in areas with less traffic may charge as little as $200 per month.

How does Salon Booth Rental Work?

If you are in the process of finding out how to open a hair salon or how to open a nail salon or your already own a salon, booth rental would simply allow you to earn income from renting each chair in your location. Each stylist pays a monthly fee and/or a percentage of their earnings.

If you’re a stylist, salon booth rental allows you to essentially start your own business without setting up your own location. You simply rent the space from a booth rental business and start bringing in clients. You pay a monthly fee or a small percentage of earnings and keep the rest.

Why You Should Consider Renting a Booth as a Stylist

If you’re starting out as a stylist, you have to consider whether to rent a booth or look for more traditional employment. Here are some reasons to go with a booth rental business.

Be Your Own Boss

When you rent a booth from a salon, you’re basically an independent contractor instead of an employee. This means you get to book your own clients, set your own hours, and build a brand that’s entirely your own. As long as you follow the rules of your rental contract, you don’t have to worry about traditional employment constrictions.

Set Your Own Schedule

Salon booth businesses don’t operate like other local businesses. Since you’re not an employee, you can schedule clients only for the times you’re available. If you’re a busy parent, you can just schedule clients when the kids are in school. If you want to build a robust business, you decide how many clients you can handle each day.

Save on Startup Costs

For those who know they want to start their own beauty business, booth rental provides a low-cost way to build a client base. You don’t need to secure an entire building, purchase all your own supplies, and go through complicated permitting processes. You only rent the space.

Have Your Own Clients

However, you’re still responsible for booking your own appointments. And your clients are your own – not the salon’s. So if you ever choose to start your own full salon or move to a different location, you can easily keep your customers.

Be Based in an Established Salon with Your Own Business

An established beauty salon can also provide some important authority for your new business. It provides a professional setting to host your appointments. And the brand name may even carry some weight.

What are the Disadvantages of Booth Renting?

Renting a salon booth provides a lot of benefits for certain stylists. But it’s not right for everyone. Carefully consider the following elements before signing on.

You’re Paying Rent as a Salon Booth Renter

When you work for a salon, you receive a paycheck without having to invest anything upfront. But as a booth renter, you pay for the space and amenities. This may be worth it for some, but could be difficult for those without any startup cash or clients.

Less Name Recognition than Larger Salons

Your salon booth is its own business. So you’re still going to be up against larger competitors. Your business model as an independent stylist needs to be able to gain clients steadily through the years.

You are Responsible for Your Own Supplies

The salon you rent space from will likely provide large items like chairs and access to sinks and phones. But salon renters normally use their own tools. So you do need to budget for these purchases.

Booth Rental Tips for a Profitable Business

If you do decide that a salon booth rental business is right for you, a well thought out business model and plan can keep you on track. Here’s how to maximize profits while growing your clientele.

Plan Your Business Model

Working as a stylist in a booth rental salon means you’re basically starting your own business. You offer your own services and prices. You determine if you only want to work certain hours and if you’ll accept walk-ins. List your services, policies, expenses, and projections early on so you can stay on track.

Develop a Pricing Strategy

Part of your business model should include prices for all your services. This helps you customers know what to expect and can help you determine how much you need to work to meet your earnings projections each month.

Get Your Record-Keeping Right

Once you get started, you need a way of tracking earnings, expenses, and customers. Some new stylists just use spreadsheets. But you may want an actual accounting software to manage finances, a CRM to track customer interactions, and a calendar to book appointments.

Know Your Products and Services

Many stylists offer a variety of hair care products along with their services. Keep a list of everything handy at your booth. And get to know each item and its price so you can speak intelligently when customers ask.

Schedule Your Appointments and Consider Salon Software

Appointment scheduling is a major factor that stylists work on daily. A calendar system or salon software can help you manage these. For example, Salon Iris allows you to customize forms to send to customers and easily collect data and complete transactions. And Boulevard is a business management solution that automates booking and personalizes appointment data.

Understand that Marketing Your Business is Incredibly Important

As owner of your own booth, you’re also responsible for marketing to customers. Set up social media accounts, purchase local search ads, or sponsor local events.

Make Sure You Choose the Right Salon

The salon you choose should match your values and goals for your business. For example, if you plan to start a luxurious brand, choose a salon that is in an upscale neighborhood with modern decor and amenities.

Choose a Salon in the Perfect Location

You also need a salon that is convenient for both you and your customers. Distance is important, but also consider the types of customers in the area and local amenities like parking and walkability.

Starting a Booth Rental Business as a Salon Owner

If you’re a salon owner, renting chairs to stylists can bring a steady income source. Here are some ways to maximize this business model.

What to Include in Booth Rental

Before working with stylists, you need to make it very clear what they can expect. For example, your rental fee may include:

• salon chair
• mirror
• sinks
• hair dryers
• towels
• coffee, water, and snacks
• office tools like a phone and printer

How to Make Booth Rental Profitable for Your Business

When you own a booth rental salon, you turn a profit based on your ability to attract stylists. You can attract more stylists by offering features that may help them attract customers. For example, salons in high traffic areas tend to be popular. However, if you don’t have the best location, offer more options like spa services that renters can offer their clients.

Deciding on the Rental Rate

The rental rate needs to be enough for you to turn a profit. But it also needs to be low enough that stylists are willing to pay it each month. If you have trouble attracting enough stylists, you may need to offer more amenities or improve your storefront so it appeals to more customers. If you have too many stylists interested in booth rental, you may want to raise rates.

Advantages of Renting Chairs in Your Salon

Running a salon rental business can be significantly less involved than running a traditional salon. Here are some top advantages:

• No need to hire and train employees
• Ability to earn passive income through monthly rent
• Easy to predict income each month
• No need to build a full service and pricing list

Disadvantages of Renting Chairs in Your Salon

However, renting chairs to independent stylists can also have drawbacks. Here are some to consider:

• Lack of control over services offered at your location
• Damage to reputation if customers have a bad experience with a stylist
• Complications with employment law over dealing with independent contractors
• Losing customers to chair renters in your salon, if you also provide stylist services there

The Legal Aspects of Booth Rental

Before you can start a salon using this business model, it’s important to get the legal aspects right. Here are some issues to consider.

Contracts and the Booth Rental Salon Agreement

Your rental agreement should lay out what space they’re provided and any add ons that are included. It also needs to state exactly what they can and can’t do. For example, are they responsible for doing their own laundry? Can they sell their own products? What behavior is not tolerated around other renters and their clientele? A signed agreement with all this outlined may help you cut ties with any contractors who don’t follow the rules.

State Laws

Each state has different laws when it comes to booth rental. For example, you may have to meet certain requirements for working with contractors or supplying physical space. Check with your state business office for specifics.

Protecting Yourself

Stylists who rent booths are generally responsible for their own insurance. Professional liability can protect against some legal action from clients. For salon owners, general liability can protect against injury on site.

Taxes

Chair renters are responsible for tracking and paying taxes based on their earnings. And salon owners must also pay taxes on their rental income. Specific rates vary by state.

Developing Your Own Company Policies

Each salon needs policies for what stylists are allowed to do and what’s included in rental agreements. And then renters need policies for what services are offered and how customers can book and keep appointments. For example, write out rates for all services and let customers know when payment is expected and how and when appointments can be canceled.

How do I start booth renting?

First, find a salon in your area that suits your needs. For example, if you need to bring in new customers, look for salons in high traffic areas. Then compare prices and amenities. Once you find a salon, invest in the tools and supplies that are not included, like hair tools and beauty products from your favorite brands.

What are booth renters responsible for?

Booth renters are usually responsible for running most aspects of their business, including:

• Finances
• Marketing
• Creating service lists and prices
• Communicating with customers
• Appointment scheduling
• Providing services

Should I charge booth rent or commission?

When you rent chairs in a salon, you can either charge a flat monthly fee or a percentage of each renter’s commission. Rent is more predictable. However, you may earn more with commission if your renters bring in a solid income. Consider how much accounting you’re willing to do and how much predictability is worth to your business model.

Are booth renters considered employees?

No, booth renters in a salon are independent contractors. They basically run their own business. But they use some amenities at the salon.

How do I prepare for a booth rental?

If you’re thinking about renting a booth at a salon, here are some things to consider:

• Read your rental agreement to learn exactly what is included
• Invest in your own tools
• Market your services online or locally
• Get a salon software
• Schedule appointments

Image: Depositphotos

This article, "Booth Rental Guide for Salon Owner and Stylists" was first published on Small Business Trends