Salon Success Secrets

The Perfect Profitable Salon Blue Print

• Lindsay Lowe & Jen Booth

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We explore the reality of salon growth and why bigger doesn't always mean better, breaking down the unique challenges and opportunities at each stage from 5 to 22 chairs. The journey requires understanding the crucial difference between profit and your paycheck – profit is the oxygen that keeps your business alive.

• At five chairs (the hustle stage), salon owners wear all hats with 8-12% profit margins when things go well
• Eight-chair salons require systems, consistency and leadership development as the business grows louder
• Some owners choose to replicate 3-4 profitable eight-chair salons instead of one larger location
• The sixteen-chair transition often requires stepping out from behind the chair to lead the company
• At 22 chairs, owners lead leaders and must maintain alignment with 18-22% potential profit margins
• Separating your CEO salary from profit changes everything – pay yourself for your role, treat profit as overflow
• Like Starbucks and Dutch Bros, salons can choose different growth models based on their strengths
• The blueprint: at 5 chairs you're the hustler, at 8 the system builder, at 16 the company builder, and at 22 the CEO

Share this with a salon owner who could win from this blueprint and join us at our next challenge!


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Speaker 1:

Have you ever wondered what actually changes as your salon grows from, let's say, five chairs to eight, then 16, and eventually 22? You know most homeowners think more chairs equals more money, but here's the reality. Bigger doesn't always mean better. Sometimes the most profitable model isn't a giant 22 chair salon. Sometimes it's three or four perfectly run eight chair salons.

Speaker 2:

So good. You know and here's another reality check Too many salon owners confuse profit with their paycheck, you know, and that that can be a rookie mistake, because you should be paid for the role you play inside of your company. And you know profit isn't your salary. Profit is the reward, the bonus, the overflow, you know, for running a healthy company. And today we're going to walk you through the perfect salon blueprint, stage by stage, from five to eight to 16 to 22 chairs and beyond.

Speaker 2:

You know, and we will share the real stories from our own salons and salon owners We've had the opportunity to work with over the years. And we'll look at companies like Starbucks, chick-fil-a and Dutch Bros to see how they've solved the same problem. You know, and since we're talking about blueprints, you know we, we love how many of you guys if you've ever maybe seen the movie or sorry. You know we, we love how many of you guys if you've ever maybe seen the movie or sorry, not the movie, the show, um, the profit, uh, you know, we love the way that, marcus, is it Lemoyne? How?

Speaker 1:

do you remember? Yeah?

Speaker 2:

Lemoyne yeah, yeah, just the way that he views things. You know, um, one of his most infamous lines is people process product, you know. And? And if one of infamous lines is people process product, and if one of those three is broken, the whole thing collapses. And so we're going to kind of weave what his perspective would be into every stage of the game.

Speaker 1:

So good, I love that show, so excited that we're calling that forth today to kind of marry that into the salon world as well. And so let's start with stage one, which we mentioned, the five chair salon, and I like to call this the hustle stage. I remember when we had five chairs, you know I was hustling hard. You know sometimes somebody would call out and superwoman would step in. Her name was Jen and she would say no fear, jen is here, I'll take on that client. I'm already working 12 hours. Perfect, I'll work 13 hours. Great, you know, I was cutting. I was answering the phone, I was checking in guests, folding towels, closing the register at night, and it was exhausting. But it was also the foundation.

Speaker 1:

You know, when you think about the five chair salon, most of the time your profit margins run about eight to 12%, and that's if we had a good month. And right now you might be saying, jen, I'm at five chairs and we're at a big fat zero. I understand that too. This is just a stat zero. I understand that too, this is just a stat.

Speaker 1:

But every missed shift sometimes felt like a gut punch. Like I said, one stylist called out sick and suddenly the whole week looked shaky and I think about this from the perspective of what Marcus would say, and he would say at five chairs, the people are everything and he says people over. I can't remember what he says, but the people were everything. And. But here's the problem, you are the business, so like if I'm pointing at myself, it's me, I was the business and in the long run that's not truly sustainable.

Speaker 1:

Like you've got no processes yet and your product, which is just the haircut, the color, the facial, isn't just about hair or skin, it's the brand experience. And you know, if your bathroom looks like a broom closet, you're not selling transformation, you're just selling haircuts. So if you think of it like a five-chair salon like this, think of a chef with a five-table bistro, like he's cooking, he's serving, he's washing dishes, like it's magical but fragile. You know, starbucks actually started the same way, one tiny Seattle store obsessed with beans. But no systems, just passion. And that's truly what five chairs feels like it's grit, it's passion and it's very little sleep.

Speaker 2:

I love that. That is so great, you know, and it reminds me of when we were once an eight chair salon, you know, and and we've got things really pumping in there we had, you know, 16 service providers in this eight tier salon, and so the salon got loud, you know, kind of in every sense. And you know, I remember one Saturday when three stylists had overlapping guests, you know, the towels were running out the front desk. Thankfully we had finally got one at that stage, you know, when we got it up to 16, they were overwhelmed, you know, and I felt like I was running around like a traffic cop, you know, and it made me realize, hey, you know, what worked when you were serving and supporting less people no longer does. When you, you know, are starting to get to that place where you have 16 service providers in an eight chair space, you know, and we truly needed systems, we really needed consistency and we absolutely needed leaders you know, and so I love to think about, like, what would Marcus say in that situation?

Speaker 2:

You know, and he would definitely point out, you know. Would Marcus say in that situation, you know, and he would definitely point out, you know, at eight chairs, you, you can't wing it, you need process. And you, because if you can't leave for a week without things falling apart, you don't have a business, you have a job, and I don't invest in jobs, I invest in businesses. You know, that would be his perspective on things. You know, and it really makes me think about Starbucks, like you mentioned earlier, Jen, because this was Starbucks challenge as well. You know, once they went beyond a few shops, they had to make every latte taste the same.

Speaker 2:

You know, and here's where some salon owners, you know, choose a different path. Um, you know, or or any business owners really, instead of going bigger, they start to replicate. You know, they build three or four thriving eight chair salons, you know, and that's truly similar to, like, the Chick-fil-A model. They don't have just one massive store, but they have some smaller, high performing units, because each Chick-fil-A I think this is so interesting they average about six to $9 million a year. That's a lot for a lot of those locations, you know that's way more than Taco Bell, that's way more than KFC, Burger King, you know, and the reason why this happens is because of all the tight systems they have and the culture that they're creating, you know, and so I think you know, if we, if we look at this truly from like an owner's mindset at this stage, you know, when I was in that eight chair salon, you know I was still paying myself a stylist wage because I was still a service provider.

Speaker 2:

Um, you know, I was doing a little bit of leadership pay, but you know I truly learned the hard way. Profit is not my paycheck, you know. Profit is what I earn for building a healthy business, you know, and my salary should really reflect the role that I play and not the scraps left over. If you can relate to that, you've been there before. I think that this is the stage where pay really does start to become confusing, because you're like gosh. You know I'm starting to get so busy. You're not quite to that next stage where you totally step out, you know, maybe from behind the chair or table or whatever it is that you're doing, but you're also not always paying yourself the way that you should in this model, that's so true, so true.

Speaker 1:

And so let's think about going from. We went from five chairs to eight chairs and then we grew to 16 chairs. And when that happened, um, things started to break fast. You know, I remember specifically one friday, you know, I was fully booked behind the chair, scissors in hand edward scissorhand making some magic happen. Every few minutes a different team member would come over and ask me a question. I was like, hey, do you know where the developer is? Or hey, this guest is unhappy. Or hey, the computer's not working. Or hey, do you think it's possible that I swap my Saturdays out with Jessica? I think she wants to work this Saturday and I'm laughing, because if you've been there, you probably are laughing too.

Speaker 1:

And during that moment, that's truly when it hit me, it's like I couldn't run the floor the salon stage is what I like to call it and the company at the same time. If I didn't step out from behind the chair when we got to 16 chairs, like we would truly stall as a company. And you know, it had me thinking of like. If you look at it from the instance of like, hey, what would Marcus say? And if you've watched the profit, you know exactly what he would say you would say at 16 chairs, it's not about cutting hair anymore, it's about people you have to think about, like who's your super, who's, who's your leadership team, who owns what responsibilities? You know, if everybody is responsible, then nobody is responsible. And then he would also talk about the process of you know, really looking at numbers, retention, rebook, average ticket, like if you're not tracking, you're guessing. And he would say you know what? And I don't gamble on guesses. I actually think one time he did a salon and I can't remember it's been, I think you can actually see it on Hulu or Prime. So if you've never seen where he went in and transformed his salon, it was really interesting. And I remember him saying like I don't gamble on guesses, like your numbers are everything. We have to see the numbers. It was just such a cool episode to watch, you know, and I think somebody that's really good at not gambling on guesses is Chick-fil-A.

Speaker 1:

We've been talking about them a lot, like they really nailed this. You know their operators aren't just managers, they're like culture protectors. You know less than is it one percent of applicants? I think it's one percent, right. Yeah, one percent of applicants get accepted because they know leadership cracks will sink the ship. So interesting apple does the same thing.

Speaker 1:

If you really think about it, you know they don't build super mega stores. They build smaller, consistent ones that usually generate about $5,500 per square foot. It's not that they're 5,500 square feet, but that's what they generate per square foot, which is the highest in retail. Isn't that so interesting? Because every square foot is designed for loyalty and experience and that's how a 16 chair salon must think. And so if you've never done the math to figure out what you generate per square foot, that really is a huge opportunity to open your eyes. And once you get locked in on that number is like how could we improve our systems and processes to increase that number, which is going to be a huge win for everyone involved?

Speaker 1:

And you know, when you think about it from an owner mindset, at this stage you really and I remember doing this myself too I really truly had to start paying myself a CEO salary. You know profit wasn't what kept lights on anymore. Profit became my bonus. You know it was like almost like your freedom fund and your business has to have profit because, at the end of the day, profit is the oxygen for your business. But I do feel like sometimes a lot of saloners do get confused about profit being their take-home pay and so when you're at a 16 chair salon, if profit is your take-home pay, oh man, we're going to have some challenges. That will come through.

Speaker 2:

So good. And really we've gone through all of those different stages five, eight, 16. And by 22 chairs, I finally realized I wasn't leading stylists or service providers or beauty pros anymore. At that stage, I was truly leading leaders, you know, and if you've been there before, you know it's not all sunshine. And I remember one meeting there was, you know, three different leaders, managers, who gave three different answers to the same question, you know, and it had me thinking about that old saying too many cooks in the kitchen. And you know, that's when I realized my job wasn't to manage, it was to align, you know, because it doesn't always necessarily mean that there's too many cooks in the kitchen, it just means, hey, how do we get in alignment, how do we help everyone fully understand their role and their purpose here? Because margins can push 18% to 22%, but only if communication was tight and culture was protected. And culture was protected.

Speaker 2:

And I think about, you know, what would Marcus say in this, this instance? You know, he would really say, at 22 chairs, you're running a company within a company, you know, because your people are your leaders and your process has to scale or it will collapse under its own weight. You know, and your product. You really have to think about what is your point of difference. Why should a guest choose you over four smaller, eight chair salons, you know, across town, and really even thinking about that from the stylist perspective to the esthetician, whatever beauty pros you have in your, in your space, why would they choose you over anyone else? And if you can't answer that one sentence, you're in big trouble, you know.

Speaker 2:

And when we look at some other businesses, you know that, you know, have created similar things. Starbucks comes to mind. They have a fifth Avenue location and that store brings in about $20 million a year, you guys, it's not because it's bigger, but because it's a destination, you know. And Dutch brothers, they kind of have the opposite model, you know, they don't have giant cafes, they just have thousands of drive-through shops, you know, and each of them are doing about $2 million with 31% profit margins. Wow, you know, that's a testament to their efficiency, that's a testament to their speed, really, you know, and truly creating that culture.

Speaker 2:

Because the one thing that we've learned, seeing all of these different models and the profit margins and the team and the leadership and the systems that it takes to create, that is, we know for certain, bigger isn't always better, because if there's no profit, uh, you know, I remember it's been years ago, working with you know somebody who had multiple locations and absolutely no profit and everyone was always like, wow, this, you know salon owner is so successful. But you know, is that success? Because one false move and every person in that company could lose their job. Because profit is the oxygen for a company. And if there's no oxygen, you know you, you walk up one little steep hill, you're out of breath and you're done. So what we know is bigger isn't always better, but better is better. So what?

Speaker 1:

we know is bigger isn't always better, but better is better, better is better. I love that. I just did the quick math on what you said on Dutch Bros. So, at 31% profit margins at $2 million, they're bringing home like $620,000 a year in profit. Wow, I think we'd be good with that for a small little drive-thru coffee shop. Sign me up. $2 million a year with, yeah, six hundred twenty thousand dollars, so that's so. That's so incredible how they've taken that one location that is has a very stable um foundation and been able to duplicate that so cool um. So let's settle this once and for all.

Speaker 1:

As salon owners, is that your salary is what you get paid for the role you play Maybe that's stylist, manager, ceo but profit is different. Profit is the overflow, it's the bonus, the dividend, the reward for running a healthy company, and I remember when I started separating my CEO pay from profit, everything truly changed. I didn't panic when profit dipped because I wasn't relying on it to pay my bills. Profit became the reward for building something that worked without me, and then it actually became a great asset where I could go do other incredible things like real estate. And so, when you know, when you think about it. Here is your blueprint. You know, at five chairs you're the hustler, at eight chairs you're the system builder, at 16 chairs you're the company builder. And at 22 chairs you're the CEO, leading leaders. But you don't have to chase bigger Like you truly could stop at eight chairs and replicate it three or four times, just like we gave you that example in Dutch Bros.

Speaker 2:

Yeah, you know, I love that. It really makes me think of actually a local restaurant that we have, that there's just a line always waiting outside, and people you know heard that they bought the little tiny property behind it. They were so excited that they were going to expand. And what did they do? They opened up a totally different restaurant, um, to create that same bustling culture, you know, and and they also then now have a line waiting outside of the door and everyone's always like you need to expand.

Speaker 2:

But what they've learned is what is profitable and what makes sense, because you don't have to chase bigger. You know you could stop at eight chairs and replicate it three or four times, you know, and never confuse profit with pay. Pay yourself for your role. Profit is the overflow, you know. Or, as Marcus would say, people process product. If one is broken, the whole thing collapses, you know. So, wherever you are, if you're hustling at five, struggling at eight, stepping up at 16 or leading at 22, the blueprint is clear. Thanks for tuning in. Share this with a salon owner that could really win from this. Join us at our next challenge and let's build the perfect salon blueprint together.