It’s no secret that self-employment has become an immensely popular in the beauty industry, but is it right for you? Don’t sign that lease just yet! In this article, we’ll go over every pro and con so you can make an informed decision before you make a commitment.

THE FACTS

Before we get into the benefits and drawbacks, let’s establish a few facts.

  • Pros and cons are subjective. Please keep in mind that this list consists of opinions based on my personal experiences in this industry. Your experiences may not align with mine, resulting in a difference of opinion. That’s totally okay, just so long as you don’t misconstrue either of our opinions for absolute truths.
  • Self-employed professionals are self-employed. The simplicity of this statement isn’t meant to offend, but it’s important to understand what self-employment entails from a legal perspective. Here are some posts on the topic to help you get a firm grasp of your rights and responsibilities under federal law.

Know Your Rights

Important Definitions

The 20 Factor IRS Test

What Are Booth Renters Entitled To?

As a self-employed professional, you are not entitled to the protections (from discrimination, retaliation, sexual harassment, etc.) and benefits (prevailing wage, overtime pay, family and medical leave guaranteed by the FLMA, worker’s comp, unemployment, etc.) that employees receive from state and federal governments.

  • Written contracts are almost always necessary, regardless of how you work when you’re self-employed. If you are a renter (studio, booth, etc.) you will require a written lease agreement. If you are a freelancer, you will need written work agreements (which you can present yourself, or accept from whatever company is contracting you). The only self-employed professionals I can think of that likely don’t require contracts are those who own their workplaces (home salon and mobile facility owners).

Can you work without a contract? Sure. Should you? I highly advise against it. Formal agreements clarify the terms of the arrangement, protect both your interests and the other party’s interests, keep disputes to a minimum, and reduce the likelihood of litigation.

few states have commercial landlord/tenant laws.

Commercial landlord/tenant laws prohibit or restrict a landlord from taking certain actions against tenants—for instance, locking them out of their units and seizing their belongings. In states lacking commercial landlord/tenant laws, the courts default to the terms of the agreement between the landlord and tenant and let contract lawyers sort it out. Barring any legislation that criminalizes certain actions, landlords may very likely be within their legal rights to take devastating actions against tenants, leaving renters with no recourse. If you didn’t make a formal agreement (or if you made a verbal agreement for which evidence of the terms doesn’t physically exist), it will be nearly impossible to enforce. For more information on contracts, click here.

Now, on to the list. Let’s start with the drawbacks.

CONS

  • Unless you own it, you can’t choose (or control) your neighbors in rental salons. Your landlord may have expectations outlined in their lease agreement regarding professional conduct in common areas, but as a general rule, they often can’t do much to discipline their tenants. (Some landlords only care about collecting their rent, so they may not even desire to deal with renter conduct at all.)

You may end up working alongside professionals who are loud and/or unprofessional.

We’ve all heard a few horror stories from renters about their colleagues day-drinking at work, stealing tools and products, making loud and inappropriate comments, trying to poach clients, and otherwise making their rental space uninhabitable. When another renter violates your workspace like this, it can impact your business negatively, making your clients uncomfortable or irritable until they either give you an ultimatum or disappear from your books.

  • Studio and booth rental, on a price per square footage basis, is expensive. When you sublet space in a salon or studio complex, you’re generally paying out far more per square foot than you would if you rented commercial property yourself. That being said, you also aren’t dealing with the commitment or hassle of leasing and maintaining a commercial unit. It’s up to you whether paying $800+ per month for a workspace that may not be much bigger than the size of a walk-in closet is right for you and your business.
  • To say the competition is fierce is an understatement. If you’re working in a booth or suite rental salon, you will be working under the same roof as your direct competitors, within mere feet of them.

You may, in a very literal sense, be surrounded by competitors.

Unless you have a pretty well-established clientele or a substantial advertising budget, it can be really difficult to set yourself apart from the hundreds (if not thousands) of self-employed professionals who may be working in your local area. Modern professionals require exceptional branding and marketing skills to get visible and draw new clients; they need exceptional technical and customer service skills to retain them. For marketing, branding, and social media strategy help, I recommend following The Nailscape and SunnyStorm Marketing.

  • Your competitors may not be business savvy. While this may be a boon to your microsalon at times, with regards to pricing and policy differences it may be a major hindrance.

One of the problems in our industry is mathematical illiteracy.

Salon owners and self-employed professionals often fail to properly calculate their service pricing. As a result, our prices have not kept pace with inflation. Instead, they’ve stagnated for the last thirty years, with the average prices for some of our services (nails, in particular) actually dropping in price, despite our costs increasing substantially over the same period of time.

I’ve written a bunch of posts about the pricing issues that plague our industry (here’s one, here’s another, and here’s another), but I’m mentioning it here because other self-employed professionals who don’t set their prices correctly will create an atmosphere of unfair competition. These microsalon owners generally end up operating at a loss until they fail completely, but in the meantime clients will have the impression that their unsustainably low prices are acceptable. As a result, you will appear to be overpriced by comparison, so it will be your job to ensure you communicate your value.

  • In open-air booth rental salons, clients may not understand the business model. Unless you’ve done the work to establish a clearly separate brand from the salon you’re working in, you may suffer from the poor reviews of fellow renters, or the salon itself if it’s a hybrid model (where the salon’s employees are working the floor with the renters).

When a client has a negative experience at a salon, their negative review tends to be about the salon itself, or at least appended to the salon’s online profiles. That negative reputation may tarnish your professional reputation or hinder your ability to attract new clients. (This is another reason why self-employed professionals really need to be on their branding and marketing game.)

“Thanks for the corrective color! Oh, btw, I can’t afford to pay you until next week…”

Some clients will attempt to pull things over on self-employed professionals that they would never dare attempt in a traditional salon. (Sure, some people are shameless enough to behave poorly any damn place, but self-employed artists, photographers, and beauty professionals seem to be targeted more frequently.)

It can be just as hard to find the right rental salon as it is to find the right employment-based salon.

Obviously, you’ll be responsible for your rent and possibly your utility costs. You’ll also be providing everything—your tools, equipment, product, promotional materials, advertising, cleaning supplies, client amenities, professional liability insurance, health insurance, facility licensing, and retirement savings account. (This list is just an overview of the myriad of costs you’ll be covering. It is nowhere near complete.)

In addition, you’ll also be responsible for federal self-employment taxes, which are double the rate of an employee (15.3% versus 7.25%), plus any applicable state employment taxes.

  • Self-employment is hard work. I don’t want to piss on anyone’s parade or anything, but very few people are capable of self-managing on the level necessary to be successful as a microsalon owner. You will need to know a lot about business, branding, advertising, bookkeeping, networking, effective professional communication, and your area of technical expertise. Not only will you need to know a lot about those things, you will have to be capable of doing those jobs yourself or you will need the funding to outsource them to others.

Can you design and maintain a website? Can you design your own business cards, brochures, and other promotional materials? Can you commit to continuously building your portfolio? Who is making sure your banking and taxes are in order? Do you have a system for assessing new products, managing inventory, arranging relationships with distributors and vendors, handling social media, and keeping yourself educated as both a professional and business owner?

It’s not all beauty all the time.

If you’re not as skilled in business management as you are your trade, you will never achieve anything beyond mediocrity as a self-employed professional. (You can attempt to argue with me on this point, but my opinion is rooted in nearly two decades of personal experience and professional observation.) This industry is too competitive and has too many exceptionally educated and talented people hustling within it for anyone to skate by doing the bare minimum. If you think otherwise, the bar is a lot higher than you’re capable of seeing from your vantage point in the industry and you are clearly not ready for self-employment of any kind.

  • The business owns you. If you’re drawn to self-employment because you’re tired of having a boss, please understand that in all likelihood, your business will be your life (especially if it is your primary or sole source of income). It’s all in how you manage it, but personally, I feel like my work never, ever ends. If you’re going into self-employment as a hobby, a side job, or a semi-retirement career option, your experience will likely be very different, but if this is it for you (meaning that your business is a full-time job designed to pay all your bills), be prepared to feel a little like a slave to a monster you created from time to time.
  • You’re on your own. I only mention this because some professionals don’t anticipate what it is like to truly be alone, especially if they’re accustomed to having an employer support them during times of sickness or conflict. As a self-employed microsalon owner, you’re it. You’re the boss and usually the sole employee. Needless to say, the business will not generate income without you. If you’re sick, injured, or on vacation, your bills (personal and business) will continue to pile up but your income will cease. Smart microsalon owners keep their savings accounts fat, just in case.

How good are you at having difficult conversations? Are you capable of standing up for yourself and your microsalon’s policies when a challenging client or fellow renter does something that requires you to be assertive and authoritative? You will be responsible for handling all disputes, resolving complaints, and even firing clients when necessary. For a lot of professionals, the thought of enforcing something like a late-cancellation or no-show policy is ulcer-inducing. If you’re one of those professionals, sincerely consider whether or not independence is compatible with your personality. Determine if you’re capable of changing. If not, you may want to consider another option.

What other options? I’ll outline those after we get through the benefits of self-employment.

PROS

This list may seem painfully short, but the two pros are substantial enough to blow almost all the items on the con list away if you’re the right person for the job.

  • You’re in charge. This means you call the shots in every conceivable way.
    • You set your schedule.
    • You set your prices.
    • You create your service protocols.
    • You design your own policies.
    • You choose your own dress code (or design your own uniform).
    • You curate your own products.
    • You craft your own brand identity and control your own marketing.
    • You negotiate your own deals with everyone your company does business with–landlords, vendors, freelance customers, etc.

Every aspect of business management that you can think of is within your absolute control to dictate. This results in a high degree of flexibility, which is our next pro.

  • Pivoting is easy. I went to college for bioengineering, so it’s no surprise that I often think of self-employed professionals as microorganisms (in a good way—I’m getting there).

Viruses are effective and efficient because of their simplicity. They’re able to evolve quickly into differing strains. That adaptability makes it hard to combat them. Microsalons, because of their small size, can also shift quickly when necessary, allowing them the opportunity to come out far ahead of their larger competitors (traditional salons) who may require considerable time and money to do the same.

For instance, microsalon owners have the flexibility to quickly learn a new skill (like a trend color technique), introduce it to the market, and promote it. By the time a larger operation gets their employees trained, does the math on the pricing, adds it to their menus and website, and gets around to marketing it, consumer tastes may shift, rendering that time and financial investment a wasted effort.

Similarly, microsalon owners can easily target and correct deficiencies in their operations or policies that are causing problems for the business. The simplicity of the model eliminates the myriad of variables a traditional salon owner would have to evaluate and eliminate as potential causes before implementing a corrective strategy—and by then, it may be too late.

THE MIDDLE ROAD: MICROPARTNERSHIP

If you’ve gone through this list and you’re having mixed feelings, there is an alternative to solo entrepreneurship that you can and should consider—one that gives you the benefits of self-employment, without the drawback of being the sole authority. (Before you ask—yes, I had to make up another word for this because nobody has coined one yet.)

A micropartnership is a very small-scale salon operation. It’s self-employment on the buddy system.

I’ve been hearing of these arrangements more frequently lately, where two or three professionals who share similar professional philosophies decide to create small salon businesses together, as equal partners. They combine what they like about traditional salons (support, assistance, and comradery) with what they like about self-employment (freedom and strategic flexibility), and eliminate what they don’t like about both. Together, they work under a shared brand with a shared mission, each splitting the managerial and administrative workload. It seems inevitable that this will soon become as commonplace as microsalon ownership.

Generally, I discourage people from entering partnerships so this option could easily come with its own list of pros and cons (an article I may write as these micropartnerships become more popular), but for now, if you’re going to consider this “safety in numbers” approach, my recommendation is to pay for an attorney to have a formal partnership agreement hammered out far in advance of making any major decisions or investments.


So, are you closer to making a decision? I hope you found this pos

 

t informative and helpful. If you’ve decided self-employment is the right choice for you, I have created a downloadable toolkit full of resources you may find useful in your journey. The Microsalon Owner’s Complete Business Toolkit has everything you could possibly need to get your business off to a great start.

If you’ve decided self-employment may be a little more than you’re capable of handling, that’s awesome too! Like salon ownership, self-employment really isn’t for everyone. It can be rewarding, but it can also be a little bit of a nightmare. If that roller coaster isn’t one you want to board, it’s better to step off the platform now before it’s too late.


[Does this post seem familiar? This is an expanded, revised, and re-published version of a previous article posted in 2013. If one of your favorite articles from the 2012-2013 archives is missing, it’s currently undergoing the same process and its new and improved version will be re-posted soon!]

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