Partnerships can be wonderful or they can be the worst thing you ever do for your business. Over my career, I have coached a lot of salon owners who were partners and I have really seen the good, the bad, and the ugly.
Today, we are going to cover salon partnerships from beginning to end, so you know what a partnership looks like as a whole. There are five pieces that we need to review before you dive into a partnership or really even consider it, so we let’s walk through them today.
Why consider partnership at all?
Whenever you’re opening a new business, you have two options: you can do it as a solo entrepreneur, or you can bring a team along with you. There are three reasons people choose to bring a partner instead of going it alone. If you’re considering a partnership, think of which these categories best describe you so you can make stronger business decisions.
Reason 1: They just can’t afford to do it alone
Often there’s somebody with a brilliant idea or a great vision for a salon, but they can’t financially do it alone. Maybe they turn to a friend or family member or even an outside investor who wants to put their money in a successful business.
This type of partnership tends to struggle. Typically, somebody has a brilliant vision but not the income. Somebody else comes along with the moneybags. The visionary person wants to take that money and execute that vision, but the person who brought the cash wants to have a say in how it’s spent. Money can make things ugly if the money person doesn’t understand the industry or your vision. Iron out the details, especially what say a financial backer would have, from the start.
Reason 2: People enter into partnerships because they’re scared
They’re scared they’re going to fail, aren’t qualified to be a business owner, or aren’t experienced enough. And if we bring somebody along with us who makes up in areas we lack, we feel a little bit safer.
These partnerships obviously don’t work out very well, either. Sometimes we bring on somebody who has done it before because we’re scared or feel uneducated. Sometimes that works, but often this person comes in in a position of power. Clear up those details at the start so you know how both partners feel coming into that relationship.
Reason 3: They’ve found the yin to their yang
They know together they will be a dynamic duo. If you’ve found somebody who makes up in all the areas you lack, and by partnering you balance each other out, it’s going to be a beautiful thing for your business.
These partnerships work really well when you both share an equal passion, have a similar vision, but have separate, but equal skill sets. You bring something different to the table that complements the other person. Maybe neither of you have opened a business before, but you’re not doing it out of fear; you’re doing it because you’re stronger as a union.
Look back over those three choices and consider why you think bringing somebody along for the ride is the right route for you.
Why you shouldn’t have a partnership of more than two people
Imagine if you open a salon with three of your best friends, and a problem comes up. You have an opinion, person number two has an idea, person number three has something to say, and person number four wants to chime in. Who gets the final word? Partnerships of more than two people don’t work out very well. It is much more difficult to make a unanimous decision as a team as it is to make one with two people.
If you’re going into business with a big group of owners, sort out the details of who’s in charge of what and who gets a say in certain areas to prevent a mess down the line.
How to build the perfect partnership
If it’s a salon, what does it look like? What does it feel like? Who are the people that come here? If you want to make a visual vision board, cut out magazine photos. What’s important is that you’re not looking at the other’s work; be in the same room, share the same energy, but don’t peek.
Once you have that overall vision, write out your one-year, five-year, and ten-year goals for the business. What are the team and the vibe like? What services do you offer? How much money are you making? Go deep on the vision, why you want to do this, and why you’re so passionate about it.
Compare your visions and talk it out. After doing the exercise in full, you can make real clear judgments if you’re really on the same page or if your vision is two separate things.
If you’re are on the same page, create a combined vision. Using what you’ve already done, do the same vision exercise together. If you can make it through this step, it’s a good sign you can make it through the partnership.
Talk about the good, the bad, and the ugly
Celebrate the good: Plan out your goals for your business and what you’ll do when you achieve it. You both wrote down a financial goal; how are you going to celebrate it? It’s essential to reward yourself, so write down whatever those rewards are.
Let’s get to the bad. Who’s going to fire employees? What are you going to do if the water heater burns out and there’s not enough in the company savings account to fix it? Is it going on a credit card or are you going to get a loan? You need to figure that out now before it’s a problem so there’s no argument about it.
And the ugly: What are you going to do if one partner decides they want out? How are you going to confront each other if you don’t feel like the other person is working hard enough? Or what if somebody decides that they want to step out from behind the chair and just manage or go part-time? These are the type of things that make businesses unravel, so plan it all out now.
Talk about the money
Most new businesses aren’t profitable for the first one to three years or even more. If money gets tight, how is that going to be handled? Also, decide if you are equal partners and financial investors. What if one person doesn’t have as much money? Does that mean that person is only a 30% owner? Maybe the person coming to the table with a little less money needs to come in with some other skill set or advantage. 50/50 is the best way to run most businesses.
Determining how you’ll be paid is another huge piece. You’ll need to decide where that money is going and how it’ll be paid out: biweekly paychecks? Quarterly profit sharing? If you’re both stylists behind the chair, do you take home only what you make, and the rest sits in a salon savings account? Toss out a couple different ideas to figure out what works best for you but knowing where that money is going and how you’re going to save is crucial.
Organize your skill sets
Sit down across from your potential partner and both write down the top ten talents – social media, branding, team management, whatever – you’re bringing to this business. Knowing each partner’s strengths and weaknesses in advance are key; if you have identical strengths, you will run into tension because you will have to outsource for every single weakness.
Compare your lists to see where you need to outsource help, like bookkeeping or an accountant, so you can plan for the expense. Then make a list of all the things that need to be taken care of in the salon, like who buys the toilet paper or pays the utility bill.
If you have equal but opposite talent lists, see each other as 51/49 partners. If you both decide Instagram is your talent, you get 51% control of the Instagram account. If your partner sees you doing something on Instagram that they don’t like, be open to what they have to say and try their suggestions. But if it doesn’t work, your partner has to agree to your way since you are in 51% of control. The same goes if the other person is in charge of the budgeting; you can voice your opinion, but at the end of the day, your partner has 51% control.
Choose who is going to get the final say in certain areas, so there isn’t an epic battle over why you spend $20 a week on garbage bags. Someone needs to be in charge of those day-to-day decisions, and having that 51/49 percent rule makes that so easy.
No matter how good you are as friends, if you aren’t good business partners, it will be an epic fail. Sort out all financial aspects ahead of time. Choose who will manage what areas of the business and be comfortable with the arrangement in full.
