Hairy situation, profitable business: Black-owned salons are gaining financial clout in the ethnic consumer market

Black Enterprise, April, 1995 by Tonia L. Shakespeare

No longer relegated to kitchen and basement fronts, black hair salons have long provided the black community with professional services.

But black hair care has also become a lucrative business for many multiethnic salon franchises, such as Hair Cuttery and Hair Studio, and department store chains, such as J.C. Penney and Saks Fifth Avenue. In fact, the ethnic total of the health and beauty aids industry (hair, skin and cosmetic products and services) is $2.8 billion.

Running a salon makes for a viable business opportunity. But running a salon successfully takes more than beauty wizardry; it takes planning and proper management.

Then there's the cost of just doing business. The start-up cost for a salon is anywhere from $30,000 to $50,000. That includes equipment, insurance, licenses, maintenance and repairs. In many states, salon owners are liable for the taxes of booth renters (stylists who rent space). Industry analysts note that roughly one-third of hair salons in black communities are booth renters. These independent contractors keep the payments made by their clients, and pay the owner a weekly fee. In contrast, employees are paid by commission or salary.

Most hair salon owners start out as stylists. Whereas a top stylist may have a $30,000 salary, a hair salon owner can eventually command $100,000 or more.

But often when stylists become owners, they forget that they are running a business. "You have to adjust--you're taking on a lot more responsibility," says Gilda Salmon, owner of Gilda & Amir's Hair Salon in Paterson, N.J. "This includes designating duties to employees, staying abreast of new products and developing vendor relationships."

Salmon notes that when you start out, you have to adjust to a change in your flow of funds. "I went from making $750 a week as a personal stylist, to not having a salary because the money goes back into the shop."

Also, many owners assume the roles of manager and stylist, only to find it too difficult to take on the tasks of staffing, bookkeeping, marketing, maintenance and repairs.

"All of these tasks are full-time jobs in themselves," says Amir Salmon, "so you're sure to run into trouble if you try to do even two of them yourself." Amir has given up his stylist seat to handle the business side of his and his wife's one-year-old salon.

It's imperative that salon owners have a good record-keeping system, says Geri Duncan Jones, executive director of the American Health Beauty Aids Institute (AHBAI), a trade association for manufacturers of black hair care products and cosmetics. "This way, if the IRS wants to see the salon's records, the owner will be prepared." Barbara Giles, associate publisher of the black beauty trade magazine Shop Talk, says, "Salon owners can avoid certain pitfalls by hiring the professional services of accountants and lawyers."

For some owners, staffing a salon may present a challenge, says John Atchison. The 20-plus-year veteran has namesake salons in New York and Los Angeles. It's often easier to train people than to find qualified stylists, he notes.

Salon owners must also change their emphasis from providing services to marketing their business, says James McDowell, owner of two Black Roots hair salons in Brooklyn. "Salon owners need to develop a strategic marketing plan in which company resources are directed toward specific goals."

A word to the wise. This is a mobile business. Employees tend to jump around. Also, high rents and pricecutting competitors cause many salons to come and go.

Still, Giles is optimistic that the market is wide open for the salon owner with management know-how. "Learning various aspects of managing your salon properly is critical to who falls out or stays in the business."