Intro: Do you feel like you were meant to have a kick-ass career as a hair stylist? Like you got into this industry to make big things happen?
Maybe you’re struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you aren’t seeing any results. Maybe you’ve already had some amazing success but are craving more. Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer.
Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you’re ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists.
I’m Britt Seva, social media and marketing strategist just for hair stylists, and this is the Thriving Stylist Podcast.
Britt Seva: What is up and welcome back to the Thriving Stylist Podcast. I’m your host, Britt Seva, and this week we are talking about stylist roadmaps and comp plans.
This question came in from an existing Thriving Salon leader, so somebody who’s a part of Thrivers Society, and what I want to try and do moving forward is pull more questions from the community and use them as coaching opportunities.
So you may or may not know this, I don’t really do any one-to-one coaching any longer. I haven’t in many, many years, and generally what I do is more like group coaching, if at all. And what I know to be certain is something that really makes my heart feel good is when I can coach somebody in depth, one to one, and really give them a breakthrough. And unfortunately my schedule and my capacity doesn’t allow for it as much anymore, but it doesn’t make me enjoy it any less.
So what I want to try to do is come on this show from time to time and pull a question from our Thrivers Society Facebook communities, or anywhere else that hits our Thrivers Society radar and bring it onto the show. So this is an example of that.
I want to read you a message that we got from one of our Thriving leaders, and then I’m going to give you some coaching in real time. This is going to be an exciting one.
This leader says, “I am personally doing great, but I need to restructure my salon and I don’t know where to start. I’m feeling overwhelmed by it. I know I’m doing something wrong, but I don’t even know where to begin. I want to double down and put all of my effort in the next year to building the salon with well-trained staff who are empowered and happy working at my company and truly create a profitable business, or just let this dream go and focus on only me and my guests for the next eight years.”
Can anybody else relate? Are there any other salon owners in the room who are like, “I either want this salon and this team to be happy and profitable, or I’d rather just work on my own”?
I almost just heard this universal, like exhale and like, “Oh my gosh, yes.” That is probably the song that every really driven, hopeful salon owner is singing right now of like either this thing’s got to turn a profit and these people have got to be happy, or I might as well go rent a booth or a studio suite or something else by myself because this turns out owning a salon is a ton of work. And if it’s not bringing me joy or money, then what is the point? Right?
That’s where this owner is at and I totally get it.
This owner says, “I don’t want to work behind the chair in salon business like this after 50.” So for those of you salon owners who aren’t yet 50, you should know you’ll hit this point and this is something I think every stylist in this room should hear and understand. if you are 18, 20, 25, 30, 35, 40, 45, listening to this show right now, as we age—and I’m mid-thirties and something I know is my body doesn’t do what it did 10 years ago. I stay fit and I eat right and I do my best, even. So time is going to get me to a degree and in an industry like the beauty industry, where we are doing a lot of repetitive use, repetitive use injuries are almost inevitable. Your elbows, your shoulders, your back, your neck, your feet, your legs. I mean, it is like a full body experience for us, right? You can only do that so long.
So if you’re a smart salon owner, your salon is your exit strategy from behind the chair.
When people talk about true freedom lifestyle and making money while you sleep, do you know that you could be a salon owner who does that? I think a lot of salon owners don’t realize that. They’re like, “Well, I’m looking for a third stream of income. I’m looking for something that makes money without me doing anything,” while you own a salon that could be a profit factory. Are you just not certain how to do that with your salon? Which is okay, we can learn how to do that, but this owner’s like, “you know, I know my body’s going to give out at some point and I want to be smart,” which I think is great. And if you’re not there yet, this is good insight ‘cause you, you will be.
“I have our own vision, mission, philosophy, and handbook all written down, but I’m stuck on one, how to lay out a clearer timeline, efficient career map for new hires, two, how and when to move the assistant to a stylist specifically based on the nature of my work.”
I looked up—I always do these anonymously, but I looked up this stylist and the salon’s profiles and their specialty is highly specialized, highly, highly specialized. Like nobody’s going to beauty school and learning this. So anybody who’s coming on board, unless they are experts in this very specific niche, there is going to be a learning curve. There’s just no doubt about it. “How much does each stylist need to produce to be considered profitable? And is it reasonable to ask them to bring in new guests to the salon outside of my efforts?”
Those are the four questions. I think that they’re great. Let’s start with the first question of how much does a stylist in the salon need to be producing to be considered profitable. I love this question and there’s a way to mathematically figure it out, and I actually have a calculator in Thriving Leadership that shows you exactly how to do it.
What I did is I asked the salon owner to send me some of their real numbers from the salon and I said, “Okay, let me run your real numbers through the calculator and I can tell you exactly how much every stylist in your building needs to produce in order to break even.”
Here’s what I think a lot of us do as salon owners is we say, “Okay, Sarah, you are a new stylist and you are making $10 an hour and you work eight hours a day.” I’m going to use simple math here, like let’s not even think about taxes and all that for just a second. I’m going to use simple math. Sarah is new in the salon, $10 an hour, eight hours a day. So we think in our mind the cost to have Sarah in our building is what, 80 bucks? $10 an hour times eight hours a day.
That is the tip of the iceberg for what it actually costs to have Sarah in the building.
In Thriving Leadership, I have a calculator called the Thriving Leadership Compensation Method and there’s three different calculators and they’re all based on what I call profit of profit. A lot of times—here’s something that’s good for stylists to know too. When we look at like, okay, let’s say the stylist makes 40% commissions and the owner makes 60. And the stylist on paper is like, “Well, that’s not fair. The salon owner is keeping more of my compensation than I am.” Do you know, more often than not, your owner is actually running in the red?
So even though they’re keeping 60% and you’re keeping 40, you’re getting the lion’s share, like you are getting the entire profit margin and then some, because a lot of owners don’t know how to properly price comp. So what happens is they end up giving away more than they can afford.
The way I have these calculators set up is you can choose to run your salon numbers based on 20% profit of profit, 30% profit of profit, or 25% profit of profit. No matter what, the stylist gets the lion’s share. The way that my comp plan works, the stylist always comes out ahead. They’re the service provider. I fully respect that. You’re the one doing the work and doing the reps, and if you’re not getting paid, you’re not going to stay working where you are and I get that.
But the reason I say this is important is because if you work for somebody who’s a Thriving leader and they’re like, “Listen, I’m working on your comp plan. You’re going to get 30% and I’m going to get 70,” they’re not keeping anywhere close to 70. You’re likely getting 60, 65, 70% of the profit and they’re keeping 20 to 30% of the profit.
But the reason why it feels like on paper they’re getting the bigger chunk is because their overhead might be too high. So you can ask–like, I’m fully fine with the owner sharing the back end of this calculator with their people. I don’t think that stylists often know the total overhead that’s included in the salon. So you should know that with my compensation plans, the stylist always gets the lion’s share.
I ran this on 30% profit of profit, meaning for this salon owner, they’re keeping 30% of the profit and their stylist is keeping 70%. Now there’s a few assumptions I made because I wasn’t certain, I assumed that this stylist had six stations available in their salon. That was an assumption. Everything else is based on fact.
So what I found out from this salon owner is that the salon does about 87 grand a month in service dollars and then their lease on the space was 3,300 a month. We added in additional expenses like salon amenities and credit card processing and cost of goods to sustain services. Like I said, I want to keep this anonymous, but this salon has specialty services, so it’s not so much like cost of color or chemicals to do texture services. It’s not like that, but they have other product costs and so we built all of that in.
We also looked at salaries, administrative costs. If you have assistants or salon managers, we baked all of that in utilities, everything. We baked that into the calculator and what this calculator told me is that the cost per employee or team member in this space based on the facts of the business is just over 3,800 bucks.
Every stylist working in her space is costing her $3,800 a month and I think this is the piece that a lot of us don’t realize. I’m not saying that’s how much her stylists produce. I’m saying that is the cost per stylist and this is why it’s important to look at all of the costs combined together. Because a lot of times we’re like, “Well, no, no, no. I only pay this person 20 bucks an hour,” that’s fine. Whatever you pay them has nothing to do with the cost associated with having them in the space.
Actually that’s a lie. It has something to do with it, but it doesn’t tell the full story.
So when I entered in the information about the full story, what we found was if this is a six-station salon, which I, full disclosure, I have no idea. I used six stations as an example, but everything else is for real numbers. It costs her about 3,800 bucks to have a stylist working for her space. Now, if we change that, so let’s say—oh no, it’s a 12 station salon. Okay. That changes everything. So then the cost to have a team member in her space is $1,900. It changes everything. So then what we do is we go down a bit further and we look at, okay, great, so based on how much revenue is coming into the salon monthly and what the cost is per person, this calculator tells you how much you can afford to pay a person based on what their production looks like, based on how many hours a week they’re working, and it also calculates for you with the salon would take home and what the stylist would take home.
What I would suggest to this salon owner is to go back to your Thriving Leadership calculators and use the profit for profit and it will give you, if you look on the line that says monthly cost for this employee, it will tell you your cost per person. It gives that to you and spits it right out.
If you want to know what the overhead cost of a team member in your space is, the Thriving Leadership calculators will tell you that straight up and that way you can know how much can I afford to pay people. We do a lot of things like what is fair? Fair is an F word in my business. It’s like a really nasty little four letter F word. Fair is not as important as correct. I like to be as fair as possible, but sometimes we lose our footing in business when all we’re trying to do is be fair.
A lot of times when we say fair, it ends up being a compromise that lands to the favor of one person or another instead of being what’s right for the business. And so when I look at like, is this fair generally, I don’t give that a lot of weight. I ask myself, “Is this correct? Is this profitable? Does this make sense for the business?” So keeping that in mind, that’s going to be the calculation you look at for how to determine if a stylist is profitable and what those benchmarks need to be to ensure that they’re covering cost.
Question number two was how do we lay out a clear, timeline and efficient career roadmap for new hires? I love this now. The other thing was, I’m going to layer that into question number two. When to move an assistant to a stylist due to the specialty nature of my work? I have to have everyone start as an assistant.
A couple weeks ago on the podcast, I talked about assistants and I said you know, no matter how complex your specialty is, if your specialty is that the stylists have to stand on their head while performing haircuts and apply color with their feet, like no matter how overly complex or nuanced your way of doing hair is, what we need to understand is that new talent today doesn’t want to be mentored for a year, 18 months, whatever. They want to get on with it.
If you are coaching to this incredible specialty, do you know how badass and how phenomenal and how attractive it would be if you were like, “Hi, when you come to work at Seva Salon, you are going to learn this exceptionally specialized way of doing X, Y, Z, and we’re actually going to teach you how to do it in eight weeks.” That’s a marketable offer. The idea of long-term mentorship, we can leave it in 1999. It’s not attractive to the market anymore. I like it for me. I’m okay with a mentorship, but I’ll be candid: even for me and likely even for you, you need results.
Now, if I was like, “Hey y’all, come coach with me. I’ll teach you how to start a podcast,” okay? Let’s say everybody in this room wanted to start a podcast. I was like, “Come on over, the course of a year, I’ll teach you to start a podcast.” Would you join that mentorship? And I’m like, “But don’t worry, because by the time you launch your podcast a year from now, you’re going to be confident and you’re going to know exactly what to do, and you won’t make any mistakes.”
Who’s signing up for that? Nobody.
If I said, “I’m doing a podcast class and you’ll have produced 12 episodes in the next eight weeks with a growth plan for success for the next eight years,” everyone and their mother who wanted to start a podcast would sign up for that. Can you see the difference? We’re just living in an era where time is of the essence, and we know that the market and consumers are changing so fast that a one-year to 18-month mentorship is just not appealing. So I would tighten the training timeline.
I understand, like I researched this business deeply and I understand the emotional, the psychological, all of the moving parts and pieces of the clientele you’re serving. I get it. So figure out a way to teach all of those things in a condensed format. Then when you say how to lay out a clear cut timeline and efficient roadmap for new hires, this as well as is in Thriving Leadership.
In module four, we talk about the purpose of roles and responsibilities, doing a needs assessment of your business, a job description framework, introducing job descriptions to your existing team, and then creating the growth plan.
Growth plans are so important for stylists right now. I don’t care if the stylist on your team has been working with you for 10 years or 10 minutes, people today are like, …“and what is your intention with my career?” Unless you’re okay with your people going into studio suites where they’re like literally taking their career into their own hands, in which case don’t bother with our career roadmap. You know that they’re going to go off on their own, but if you want people to stay with you, they need to know where they’re going.
A growth map is not, “If you keep working hard, you can make more money.” “If you keep working hard, you can be a level 12 stylist.” That’s not a growth plan at all. We need to get a lot more intentional with what our growth plan looks like.
So when we’re creating these growth plans, some of the things that we look at are full job descriptions, what is required to be promoted and it’s transparent. We want a 16-week new hire training calendar with KPIs, key performance indicators. A lot of us are like, okay, great. So our KPIs are selling this much retail, making this much money, seeing this amount of new referral requests, that is incredibly basic. For most of you, like have any of you ever hired a stylist who’s great on paper, they are a money making factory, like they’re printing cash at their station or something like that, but they are rotten. Their personality stinks. They cause you a lot of trouble. They never seem to be happy, but they’re hitting all their KPIs, so we have to promote them.
What kind of culture is that we’re creating in our salon? You can be kind of a jerk, but you can still get promoted. Like what’s smart business runs that way in our industry? We do it. I totally understand. But when we have KPIs that aren’t just about how much money you’re making, it changes everything.
I think it makes you much more respectable and trustworthy as a leader. I think it makes for a much more appealing place to work. Because on the flip side, some of you have team members who are incredible mentors. They’re inspiring, they’re social media mavens, they’re ambassadors for the brand and they make good money, but maybe they’re not crushing it yet. Who would you promote on paper?
If I was like, “Listen, I’ve got two stylists. They both want to work for you. One of them makes good money, but they’re a nightmare to manage. And one of them will be like a dreamboat, they’ll be your marketing best friend. They will mentor anybody new on your team. They will always champion for you, always stand beside you, but their income’s growing slower.” Which of these people do you want? The smart businessperson will always choose the correct cultural fit. The person who’s in it for quick cash will choose the money machine and I get it, but then don’t wonder why nobody wants to work for you.
So really thinking about what is required to be promoted, what the KPIs are, what we’re looking for in people, and then what could that growth plan looks like?
The other thing we want to think about is creating hourly wages for assistants. So I talked about a minute ago, this salon owner was asking, “What is the cost? What is my overhead on such and such a stylist?” So I gave you the breakdown for that. When we’re looking at an assistant or somebody who’s not income-producing, first of all, I think assistants should pay for themselves. I really do. I think if you have an assistant in the building, they should be doing things that generate revenue for the salon.
When I was a salon director, I was considered non-income producing because I never worked at the front desk. I didn’t take clients. I was strictly an administrative role. However, I generated a ton of revenue for the business, which is why I was able to stick around and why my owner was able to go absentee. Because even though I was technically administrative, I did things that produced revenue. That’s what you want your assistants to be doing. It’s really important.
With that in mind, yes, we look at their wage and how much they’re being paid, but you also have to factor in the cost of product to train them. I know for us, we allowed our assistant to do a lot of color training. I mean, we probably burned through several thousand dollars in color on every assistant that was never factored into our budget for training. I’ll say that straight up. And I look back and I’m like, “Why in the heck did we not think that through?” It’s like, are we thinking about all those little nuances, right, of what it’s costing to bring in these people and train them.
Now the last question you said, “Is it reasonable to expect new stylists to have to bring in new guests to the salon outside of your efforts?” For any salon owners out there who were like, “You know, I believe my stylist should build their own clientele,” I’ll say it right now, I firmly believe that as well. I think that clients today are looking to line up with stylists that they really resonate with and I think that it is a really personal choice.
I do believe every stylist should be working to build a clientele. That being said, I also know that pressure right now is on salon owners to be the clientele driver. It doesn’t really matter what my personal opinion is. The opinion of the marketplace, i.e. stylists looking to work for salons, is that they believe if I’m going to work for you and not work independently somewhere else, you better be providing a clientele for me. Like if someone is going to choose to work for you over a studio suite, why should they? What do you have to offer that somebody else doesn’t? And if you are building clientele for them, that is a massive incentive.
It can’t just be lip service. You have to have data behind it and you have to prove it. You can’t say like, “Oh, we get a lot of walk-ins every single month.” It needs to be we get 80 general client requests a month. Generally speaking, each of our stylists receives about 14 of those. So you’d be receiving 14 monthly. You can count on us for that. It’s a promise. It’s not an idea. It’s a promise. That’s what it looks like to be incentivizing stylists to work with you and what it looks like to be driving that clientele growth.
Now, when you say, should stylists be bringing in their own clients generally, yes. However you admitted, it’s almost like a contradiction. You admitted in the start of your message. I’m in this very specific specialty, which you are, you’re in a niched-down niche. It is really specific and you yourself have said, “I’m the expert of it.” All these people need to be trained in it. You’ve chosen a market that is narrow, which is why you’ve done well with it. You are the specialty of the specialty.
If I was struggling with what you offer, a hundred percent, you’d be my choice because you look like the expert in it, but you can’t expect a new stylist to know five people who happen to have this very specific need. I don’t see how that would work. You yourself have said our niche’s so specific that the training is highly specified, and it takes a lot of time.
You yourself know it’s not a general thing, so then you can’t expect people to just identify people in the grocery store or something that might potentially be a good client and force a card on them. I think that’s a real reach.
So if you’re going to stay working this specialty that you are, which I think is a great idea, like I’m going to encourage you to do so, I think a part of what you’re promising is, “…and I will build this clientele for you and along the way is part of your training program.”
You should be training your stylists how to attract their own clients using a marketing funnel, obviously. But for you to say, “…to work here, you need to be providing X number of clients to the business”—that can be a KPI, but it should be a KPI for somebody established, who you can say full well has been trained, understands exactly how to be attracting that client. So it’s for the more senior person. Your new person doesn’t have that skillset yet by your admission, so you’re just making sure that you have set them up properly to do so and that that point it can be introduced as a KPI.
This is the tip of the iceberg when it comes to creating growth, roadmaps, and comp plans, compensation plans, but I hope this is getting your wheels turning. Thriving Leadership is available to you. Registration’s available 24/7/365. If this speaks to your heart a little bit, you can head to thrivingstylist.com/thriverssociety to learn a little bit more.
And as I always like to say, so much love, happy business building, and I’ll see you on the next one.
