Elevator Speech: 5 Salons in 1
Most salons contain less than 10 chairs and cater to only one market segment. Because every salon
needs a bathroom, a waiting room, storage space, and an employee area, the selling space is limited to
approximately 50% of the leasable space. Therefore, the break-even cost per chair is usually over $20
per chair per day.
The “5 Salons in 1” will contain 115 chairs and will lease 8,800 sf. (or include office suites with an
additional 3,200 sf.). The salon will incorporate all segments of the hair and nails industry, including the
new rage, individual suites. The segments will be separated by individually designed work stations. This
will allow for individuality of the separate market segments. We will also include a keyless entry system.
Now the model will allow for sales 24 hours per day, 7 days a week. Each station will be wet (except for
styling stations). Many of the weekly rental stations will be set up as a suite and lockable. We estimate
the break-even cost per chair will be below $5 per day. As the low cost producer, the salon can offer an
incentive package that the other salons will be unable to match. See our business plan for an example.
In addition to catering to the different segments of the retail market, the “5 Salons in 1” will cater to the
underutilized participants of the hair and nails industry. These participants are the recent graduates of
cosmetology schools, and the former full-time cosmetologists that are now parents or who have left the
industry for a full-time salaried position. The Hair and Nails Group will form a “part-time” pool and
provide stylists by the day. The “5 Salons in 1” will be able to accommodate ~ 2,000 “part-time” stylists
on a weekly basis (as each part-time booth can be rented out 4 times per day and sub-leased by the
hour). Therefore, the “5 Salons in 1” will drive the demand for the “part-timers”.
As stated above, the “5 Salons in 1” will be the low cost producer. Although, it can afford to lease
stations profitably for $50 per week, filling full-time positions may still be difficult. Forming a salon
management team may be just as difficult. The solution could be to hire a “Headhunter”. They will
charge $1,000-$5,000 per management team member. A better solution will be to make the same
payments; but, as allowances toward their booth rental for the participating stylists. The referral
payments will secure the demand requirements for management and full-time independent contractors.
We will form our own professional management company to hire and supervise the management team,
and design the salon. We plan to lease 18 separate large suites by the month, and 19 smaller, in-store
suites, by the week. In addition, we will have 20 nail stations, 10 pedicure stations, 14 weekly stations
(non-secured) and 33 daily stations. The total number of chairs will be 115. We will use the “part-time”
pool to lease the 33 stylist chairs and the 30 nail and pedicure chairs by the day. We plan to have both
the cosmetologists and investors become familiar with our sub-leasing platform. We will offer the
platform for FREE to the cosmetologists and offer the investors a chance to learn the system for $10
(introductory price). The investors will receive one month free in an operating 5 Salons in 1. In the
Patent Application No. 14/220,835
Title: LEASING SYSTEM
second month we will limit investor involvement to the first 100 for a fee of $25. Included in the
business plan are other profit centers. There will be the ability to rent supplies to the cosmetologists,
profit from product sales without carrying inventory and use the professional side of the Hair and Nails
platform to rent chairs in the off-hours. We can now rent a chair for $10 for 6 hours (prime time) and sell
the other three 6-hour blocks of time for $3. The investors could then pay the $3 and sub-lease the chair
for $1 per hour and make a $3 profit. That could translate into a $90 profit per 6-hour block per month.
Not bad for a $3 risk. Total receipts per chair would then reach $19 per day + $2,500 per month. Our
management company will include: the investor sponsor, the referrer of the sponsor, the interior
designer, and myself.
Remember, leasing chairs by the day or week is only one business model. As the low cost producer,
we could offer a 90/10 split instead of a 60/40 split. We could even afford to pay the cosmetologists
by the hour, let them keep the tips, and share some revenue with them. On the retail side, our price
list will compete with any salon in your area. As we have targeted all segments of the industry, we
could have separate price lists that will decimate our competition in each segment.
This is a WIN-WIN scenario though. The cosmetologists will make more money and have more
flexibility. The salon owners will become our managers, will make more money, and have no financial
responsibility. We will create higher returns for the investors and they will have no management
responsibilities. The large public salon companies will become the ultimate owners with no start-up
costs or risks.
As we plan to raise money on Crowdfunding sites, our investors will not want to manage a salon. Our
professional management company will aggregate funds, design the salon, supervise the construction,
hire the management team, supervise the salon’s performance, and pay the bills. The excel spreadsheet
anticipates an absentee owner with a management company. The spreadsheet shows a 30% of the
profits payment to this entity. Projections show an approximately $100,000/year payment (after the
third year) to this entity, per salon. Since our management companies will want to show some
immediate revenue, the excel spreadsheets show a minimum $30,000 payment per year per salon. Our
management company will show revenue from both; the management side and the ownership side of
the salon.
The “5 Salons in 1” design is much more efficient than a standard salon. Since the break-even cost per
chair is less than $5/day, this salon has a competitive advantage when hiring management and
cosmetologists. The use of the Hair and Nails Group platform and their “part-time” labor pool provides
the missing ingredients for the “5 Salons in 1’s” success. Using the “big box” concept, our salon will do to
this mom & pop industry what Blockbuster did to the mom & pop video rental industry.
Patent Application No. 14/220,835
Title: LEASING SYSTEM