Main Street Makers

#5 Kathleen Lauer: Leading Her Salon by Stepping Back From the Chair

• Episode 5

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In this episode, we talk with Kathleen Lauer, the owner of Inspire Salon, about the challenges and successes in running a small business in the beauty industry. Kathleen shares her initial fears about stepping away from directly cutting hair and into a pure leadership role — but that it became the catalyst pushing her business into growth mode.

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don't give up, just keep pushing. You get a little ahead and you get knocked down and you have to find the passion within you to just keep pushing and to not give up. Because eventually doing all of that work in the beginning creates a strong foundation. And then once you get past that hump, like that growing hump, and you are finally having that extra money and profiting, then it just becomes full circle and all worth it. Welcome to Main Street Makers, a bi-weekly podcast that features real local small business owners who have transformed their passions into profitable businesses. Learn from fellow small business owners on how they overcome challenges, find opportunities, and create thriving operations that make our neighborhoods more vibrant, connected places to live. I'm Tiffany, and this podcast is brought to you by Nav, the business credit platform that believes every small business owner deserves the chance to succeed. Thank you for having me. Yes. And so could you tell us about your business and sort of like the origin story and sort of the why and the what and the how. Yeah, sure. So let's see. I own Inspire Salon, which is in Ellicott City, Maryland. I opened in 2013 after being in the beauty industry for a very long time. So it was definitely a goal of mine throughout the years. I started working in a hair salon when I was 13 years old, shampooing. Was working as the shampoo assistant all through high school. after high school went to cosmetology school and then went right into to doing hair. And then kind of jumped around from salon to salon trying to find my place. The beauty industry is a tough industry. So this is a very common thing. A lot of stylists have a hard time finding the right salon for them and kind of jump around. So I went through that path for many years and eventually found a place that I liked and that I was able to grow and get educated and build a clientele. And after being a part of that salon for about five years, I started thinking about opening up my own business and going in that route. That's awesome. So what inspired you to want to open your own business? My first reasoning was wanting to change the industry a little bit. I wanted to change the relationship between an owner and a stylist, and I also wanted to change the relationship between a stylist and their clients. So that was, and still to today, that's still my motivation of why I do what I do, and that really was my goal from the beginning. That's awesome. Yeah, I love that when I hear that people, you know, they see a problem and they're like, I can solve this. I want to solve this. Yes, yes, and I think everybody around me, every stylist that I worked with was going through the same thing at the time. And I worked for good owners and bad, you know, not so good owners and had challenges and combining all of those experiences helped me see a clear picture of what needed to be different. Wow, yeah, that's very cool. Yeah, because I know some of your stylists, like I met Jenny, she has been there. We live in the same area, so that's why I've actually met you in person. um But she's been there for a long time, right? Like since the beginning, right? since the beginning. she's been since day one of us opening. We also worked together for many years prior to me opening. So we met, we've known each other for about 20 years now. So we met a long time ago. That's awesome. That is so cool. And so how many employees do you have currently? Right now I have 14. Okay, that's great. And so were there any surprises that came about from launching your own business that you wish you had known before? absolutely. It's way harder than you can think that it is. I was good at doing hair. I was good at building a clientele and I was good at just managing the day-to-day flow of a salon. I did not fully understand the business side of a salon and what it took to be successful. And it's not just about doing good hair. That's actually a very small portion of the success of a business. So I wish I would have known that ahead of time and just had more education on that. And that would have saved me a lot of time and mistakes and money. uh And it cost way more than I thought it was going to cost. I had a set amount in my mind of what it was going to take to open up and to do my renovation and to get going. And it was double that cost. Yes. It was. It was a lot. ah you make mistakes on the way, especially when building out a business that costs money. So that set me back. And then I think it also took me longer to be able to make money in the salon than I anticipated. I always felt, I'm going to open up and I'm going to make money. I'm going to be able to pay all my bills and pay myself. And that's not how it worked. Yeah, you mean like to become profitable, like actually bring in some profit? Yes. Yeah, so how long did that take? It took about six years. The first year, sometimes I was in the negative. I wouldn't pay myself as much. I was doing hair full-time and managing full-time. And all of the money that I was bringing in from my clientele, I wouldn't take all of it. I would leave sometimes like 75 % of it in there. I was just really struggling personally just to keep my business afloat. And then as the years went on and I started getting better with money managing and marketing and managing my team and being able to retain clients, then we started to grow. And about that six year mark, I started having extra money. But up until that point, just was years of just breaking even every single month. It was so frustrating because I could not get ahead. Yeah, was there like something that unlocked that for you that unlocked the okay now we're profitable or was it just gradual over time? It was over time of building and getting the right people to work in the salon. In this industry, I'm very dependent on who works for me and being able to build a clientele and retain. So being able to get a solid team in place and to grow on that really helped. ah But even at that six year mark, was just a small amount. And it wasn't really until the nine year mark that I said, okay, this is worth it. Now I'm actually making some money off of this every so how are you managing your cash flow in the beginning? If at all. So bad in the beginning. So in 2013, I had no knowledge of QuickBooks, counting, balancing. I was doing everything with pen and paper. At the end of the month, I would write out my expenses with how much money I had and everything was in writing. Oh my gosh, the first year, was a challenge, especially with taxes as that went on. And then I was overspending. My support staff, my payroll was too high. My inventory and back bar expenses were too high. So it took so long just to figure out that cash flow of when to spend money, when to hold back the money, and to get that going. Yeah, that's a huge struggle for, I think, every small business owner. So you found QuickBooks helpful? Yes. So after the first year, my first year with my accountant and I handed him over all of these receipts and paperwork, ah I learned quickly that he was very annoyed with me and it cost so much money for him to go through that and work it out and to get it organized. Um, so after that, I started taking some courses in QuickBooks. My mom is an accountant, so she was able to sit down with me and teach me some things. And then after a couple of years, I, I grasped it and, understood what needed. Yeah. Yeah, yeah, it's so common. Well, that's good that you have like figured it out and also having a mom who's an accountant. That's great. Yes, because first she would check me, so that really helped. And to be able to have somebody that you trust that can look at your money and check you and give you advice is so valuable. And you can find. Yes. Yes, definitely. it was sort of like around that first year mark that you realized, OK, I need to get organized. And then it took longer than that, I'm guessing. Yeah. and it took longer than that. At least everything after that first year was no longer on paper and that I was learning how to balance my monthly expenses in QuickBooks. And being able to do that then saved me money when it became tax time because my accountant had less work to do. Everything was already in there and organized and in the right area. And so was just easy and quick. But it took me a lot longer to understand how to cut my expenses so that I could have a higher profit. Okay, and how did you finally figure that out? That's a good question. I don't know, just wisdom. You know, throughout the years you make the mistake and you get sick of breaking even or being in negatives and stressing about money. You know, with any small business, especially in the service industry, you can predict your cash flow somewhat, but it changes. You know, if you have a snowstorm, all of a you can't open and now you're down a day or somebody's sick and you lose out on their clientele that day. So that's really hard to predict. And I got sick of that stress. uh and always worrying that, please don't let it snow because it's going to knock a day off my week and really mess me up. So being able to get, have a little extra money every month and then save that money for those months that I need it really helped reduce that stress and understand the flow. Yeah, yep, that makes so much sense. em And so have you applied for funding? Did you apply for funding at all along that journey? Well, I did, but I never could get approved. So starting out, I could not get approved. I was very young in my late 20s. I barely had any credit. I started the business with cash that I saved throughout the years. I had one personal credit card that was maxed out before it opened, because everything cost way more than I thought it was going to cost. And so I didn't have any credit to use. And every time I would apply, would get the same reason, not enough credit history. They viewed me as it was an unknown, too risky. So that led me to realizing that I needed to fix that personally, that I needed to build personal credit. And that was the starting point. So I began opening up credit cards really in anything that I could get approved of, stores. know, bigger visas with small balances. They were like $1,000, $2,000 is all I could get approved of. And I put all of my personal expenses on those cards and then paid them off every month. And doing that very quickly, you can build some credit. So then I started getting approved for higher credit cards. And then after doing that for many years, I was able to finally get approved. for a business credit card that was not connected to my social security. I think that's the hardest part because you get approved and even if it says, Kathleen Lauer, Inspire Salon on the credit card, it's still connected to my personal social security. So then as the business debt goes up and down, so is my personal credit score. And that's challenging. Yeah, definitely. Have you looked into business credit at all? Yes, but it was many, many years. think it was probably eight or nine years in that I was finally able to get approved for a credit card that was totally in my EIN number, not connected to my social security number. And that was through my business bank. And I think that helped because they saw years and years of cashflow and they finally approved me for it. Yes, yeah, do you do you like track or monitor your business credit scores? I do you do okay? I I get pretty crazy, like obsessive over it because I have to get this right. So I had to build it for myself personally and had to build it for the business. So now I do keep track. Yeah, yeah, it's something we've learned is like talking to people and it just makes perfect sense is like a lot of people who start a small business just don't know that business credit exists. Yes, I didn't. didn't. Yeah, had no idea. And I didn't understand the concept of your social security number and your EIN number and how that works and how those affect things. Yeah. What kind of entity do you operate as? An LLC. Yeah. A lot of people are sole proprietors, so that's even more connected. Yes, even more, which is so scary because if everything is connected personally and something happens to your business, then in your personal life, you're suffering. And that was always my fear. So being able to get it out of my personal social security and my personal name just gives you a little bit of security because I know if something happens with my business, it's not going to immediately affect me personally. Yes, absolutely. When did you reach the point where it felt like a real business quote unquote? Because a lot of people, they're kind of afraid to even call themselves business owners because in the beginning especially because it just feels like I'm not really a business owner. um But when did it start to feel real for you? Oh, I don't know if it still feels fully real. And maybe that's what makes us business owners, because we're never fully accepting or happy. We're always pushing for the next thing. But I think I got a sense of it when I stepped back from doing hair. So in about 2019, 2020, the salon was getting so busy that it was hard for me to have a full clientele. manage and do everything that I needed to do as a business owner. So my days were super stressful and I was not giving anything my all. I was torn between a lot of responsibilities. So I stepped back from doing hair and I just said, I'm not doing it anymore. And I took a break for two years and I focused on the business side of the salon and the marketing of the salon. And it took off. It grew so quickly. And my numbers were skyrocketing just from me focusing and giving it its attention. And I think at that moment I was like, okay, this is my role. I'm a business owner and hair was my passion, but I can no longer do that full time because for me to be successful, this needs my attention. Yeah, that's so cool that it grew once you started doing that. I feel like it would be scary to do that, right? To like step out. oh Yes, it was very scary and the small amount of money that I was taking from the business was coming from my clientele. So it was really scary because now I was taking that away and my clients were going, staying in the business, going to other stylists. So that's good. The money was staying there, but I had to pay them for doing that work. So I needed to be busy enough and make enough money that I had extra at the end of the month to pay myself. And that was very scary. Yeah, that makes perfect sense. That's very cool. So I did want to ask you, because I feel like your business, I've been there, and I feel like you are really good at customer service. And it seems like you put a lot of care into customer service. Was that a focus for you? Yes. Or is that currently? Yes. So I think before doing hair, being an assistant, I was at the front desk of a salon for a very long time. And that gets you go to customer service very quickly. And you never know what is going to come your way. So you have to deal with all different types of people and all different types of moods and personalities throughout the day. So you get a tough skin and you get used to how to manage that. And I think it lacks, and especially in the beauty industry, it can kind of be not a career for stylists. you get to play with hair all day. That must be fun. You know, it's not taken as an actual career that they're living off of. ah So it was just a way that I wanted to elevate everything. And then you go into some other salons and watch their customer service. I always felt like it was lacking. So mixing that and being able to do great hair with customer service just elevates the client's experience. And I like making people feel good. When you come in, I want you to kind of leave your life behind and enjoy your hour at the salon. Yeah, well, that definitely was the case for me. Yeah, definitely. Yeah, that's fantastic. Yeah, because it really makes an impact on retention, I think, for people to feel like taken care of. Yeah. That's very. able to do that before you come into the salon, which you experienced a little bit, we ask a lot of questions ah before coming in. And we ask all of those questions because I have 12 stylists and they're all good at different things. So I need to fully understand who you are, what your goals are, your hair type, your texture, all of these things. And then I can properly place you with the right stylist. which helps retention. Because if I'm just winging it and you call and say, hey, I want a haircut and I put you on the next person's available on their schedule, that might not be a good fit for you and then you never come back. So I found implying that customer service upfront and going that those extra steps in the beginning helped our retention rate and makes the client feel important at the same time. Yeah, and I actually sent a picture in of my hair, which I'd never done before, but I kind of loved that. It was like, oh, they actually care about my hair. And that's kind of what I've been looking for for years. So that's really special. good, I'm glad. uh I also noticed that you require a credit card on file, which I've heard from, we've talked to other business owners for the podcast and that's been like a strategy for cash flow actually for like in case people don't pay. Is that why you decided to do that? So we do it just in case you decide not to show up for your appointment. It's like an appointment guarantee. So stylists are commission-based. So if they don't have a client in their chair, they're not getting paid. And sometimes, especially colors, that's a four to five hour appointment, like a large blonding service. And if they're working at eight, nine hour shift, that's half of their day. And then if the client doesn't show up, I lost out on that money, the stylist lost out on that money. So we started doing that just to protect, to protect the business. But we, again, I work customer service in it, so it's never just a strict, she didn't show or she's 15 minutes late and we're going to charge her right away. ah It's the last resort for me. I really don't want to have to charge somebody for not being there. So we always try to put ourselves in their shoes and see what life situation came their way and why they missed their appointment. Yeah, it makes a lot of sense and I think it's pretty smart because you're right. If you don't show up for a lot of other things, you still have to pay. Absolutely, yeah. If you miss a doctor's appointment, even really nice restaurants now take, you know, credit card and they'll charge you if you last minute cancel or don't show up. it's because they're small businesses and they have to survive. Yes, exactly. Well, one final question. Do you have any uh like blast advice, words of wisdom for new or growing small business owners? Don't give up. Just keep pushing, especially when you're first starting out, you get a little ahead and then you get knocked down and you get a little ahead and you get knocked down and you have to find the passion within you to just keep pushing and to not give up because eventually doing all of that work in the beginning creates a strong foundation. And then once you get past that hump, like that growing hump, you are finally having that extra money and profiting, then it just becomes full circle and all works. That is fantastic advice. I love that. Thank you. Well, thank you so much. This has been really, really, really helpful, I think, for a lot of people. we really appreciate you coming on today. Thank you so much for having me.