Open A Barbershop 101: Your Ultimate A To Z Guide
Having your own hair grooming business has a lot of advantages compared to just being an employee or a commission earner of another barbershop.
First, when you’re your own boss, you can freely practice your craft without having to answer to anyone else. Secondly, you get to determine your own service rates with the potential of earning as much as what the experts get.
And lastly, you’ll have more opportunities of expanding your business when you attend international barbering events as you’ll be bringing your own brand/name.
No wonder most barbers make the establishment of their independent barbershops the ULTIMATE ENDGAME!
Take for example Julius the Barber, whose success story many barbers – both newbies and veterans – hope to emulate.
Barbering was a hobby he was good at in high school, but Julius decided to pursue a career in banking.
However, while climbing up banking’s corporate ladder, he had a sudden realization that being a barber was his true calling.
So he dropped everything, entered a barbering school and made a name for himself while working in several salons and barber shops in Beverly Hills.
Counting several VIPs – celebrities, pro players and the likes – as regular clients build his rep up and allowed his business to gain momentum and eventually, expand.
Now, he’s enjoying the perks of being a well-known barber. TV appearances, being featured in print, becoming a regular contributor to a number of magazines like Men’s Health . . . well; Julius has become a celebrity himself.
The Entrepreneurial Barber
Putting up your own barbershop is overwhelming in both good and bad ways. While the thought of having your own biz which you are most passionate about is exciting, the road to getting there as well as the will to keep it going entails hard work and money.
Not only will you need to learn the many aspects of the hair cutting/hair grooming business.
You’ll also need funds to pay for the building lease and the procurement of equipment you need like barber chairs, tons of other barbering products, the doodads to keep your waiting customers entertained – a TV perhaps or magazines – and just about a million of other things.
What’s more, as barbering is part of the aesthetic industry, a faultless interior design for your shop is one other thing you need to invest in.
So, before you plunge headlong to opening up your own barbershop, you need to have a deeper insight and understanding of these two big separate words: BARBERSHOP and BUSINESS.
Thinking like an entrepreneur
Okay, opening up your own barbershop is your greatest goal. But before going there, you have to answer these questions with all honesty:
- Am I good, if not one of the best, in what I do?
- Do I have enough knowledge of the ins and outs of this tonsorial craft: what products and tools work best and where to get the best supplies at their most competitive rates?
- Is my training [and of intuition] of what works and what doesn’t when it comes to satisfying my clients and marketing for new customers enough?
Your answers to the three questions above determine your level as a barber. These questions point to one very important thing — WHEN YOU OPEN UP YOUR OWN BARBERSHOP, BARBERING MUST BE THE EASIEST PART.
Being a veteran at haircutting/hair grooming is also a plus.
While finding a place that’s high on traffic for your barbershop can’t be stressed enough, already having a list [better if it’s a long one!] of regulars that you’ve had working as a barber over the years is very helpful.
You have to put in mind that a venture in the barbering business doesn’t pay off immediately so, you must be ready for the long haul — committed to your craft through the lengthy and mostly gritty ride ahead. In time, you will be able to see the sweet fruits of your labor.
Becoming the Wealthy Barber
Business is not an easy “word” to decode. It’s no wonder it has its own major in college with lots of players in the field from business accountants to business lawyers and even business advisors.
The barbershop business is no different. Starting and figuring out how to keep it up and running are two complications you have to deal with.
The best way to start your own haircutting/hair grooming business is to make a business plan. A business plan is essentially your barbershop’s guide to making revenues in the next 3-5 years.
Here, you will calculate all your expenses in preparing your shop for opening as well as project reoccurring expenses you will have monthly and annually.
Next, you will determine how much you will ask for every service your barbershop offers to meet your expenses and how many clients you will be able to serve in a day.
By doing so, you’ll be able to make a forecast of your profit by charging rates that are competitive with the other barbershops within your locality.
You will need about $5,000-$10,000 to start your own barbershop business — how much depends on how expensive your needs will be and the volume of supplies you need to get.
Your startup money will either come from your own pocket or from loans.
If you plan to get a bank loan for it, you should have a strong and solid business plan to present to them as your legibility to be granted the money depends on it.
Crappy (but necessary) Lawyer Stuff
Legalities also come into play when you start your own business venture. The legal operations you need to consider for your barbershop include employment as well as the business and tax laws within your city, county and state.
Additionally, you will also have to deal with federal regulations about the business field you are getting on.
But don’t let all these biz talks worry you.
You don’t have to be a business degree holder or a certified accountant to deal with all these. The best option you have in dealing with the business end of putting up your own barbershop is to talk to other barbers who went through similar processes to build up their own businesses.
A lot of cities in the country also have their own officials designated specifically to help novices [like you] get through the intricacies of establishing your own business.
The business office of your city or county and your state’s barbering/cosmetology board are the two agencies you need to work with when you put up your own barbershop.
Cutting through red tape I
Obtaining the needed business license for your barbershop is easier than you think. You just need to go to your city or county’s business department and file the needed application form [that’s about 1 or 2 pages long] as they are the ones responsible for issuing you your business license.
For the application, you need to determine what kind of business you want to put up. Basically, there are three business forms you can choose from:
Sole Proprietorship –If you want sole ownership of your barbershop and plan to do everything on your own without hiring anyone else then, this is the model you are adopting.
LLC [Limited Liability Company] – If you plan to hire employees in the course of your business making you the boss then, use this model. With LLC, you can write out your earnings as personal income on your tax papers while maintaining a degree of protection from complications that may arise like lawsuits.
Another thing is that if you’re planning on starting up a franchise [like Fantastic Sam or Supercuts,where the shops are under the governance of a corporation], you can use this model, too.
Corporation – If your plans revolve around a big haircutting/hair grooming company with the desire to hire multiple employees, open up many branches and attract investors, this is the model to use.
Talking about business licenses, you might be required to get insurance [liability as well as the other kinds that cover building, flood, fire and the likes] along with your license to operate.
But even if it isn’t a prerequisite, a LIABILITY INSURANCE is a must have for business starters.
Cutting through the red tape II
Being able to meet all the requirements set by your state’s barbering/cosmetology board is one challenging aspect you have to deal with.
These requisites differ from state to state so, you have to check with the board in your locality to find out the specifics you need to meet when you put up your own barbershop.
More than often, they work side by side with the state health department, the agency that conducts inspections to make sure your business establishment meet the state’s standards. The usual state requirements you need to meet are:
- An independent barbershop owner application filled up
- Proof of lease or ownership of your specified business address
- Proof of business license [city or county]
- Proof that you’re a certified barber
The usual requirements your business facility needs to meet are:
- Hot/cold running water as well as drinking water
- Public bathrooms
- Trash containers for the garbage and other soiled items
- Storage cabinets that you can close where you will put your barbering equipment, supplies and clean towels
- Square footage need for the placement of your barber chairs [example, one state requires barber chairs to have 35 square feet in between]
Meeting these requirements depends on what your newly-leased space lacks and may involve consulting an architect for the design and several renovations.
You may also need to talk to a plumber if plumbing installations are needed as well as an electrician to check if the place’s wiring design fit the standards to a T.
Then a series of inspections follow — the use-and-occupancy license inspection, one last survey by the health department and a separate look-over by the fire department.
Pointing all these things out is not meant to dissuade you from pursuing your dream of having your own barbershop but they’re written here to persuade you to go and ask about your area’s specifications and calculate the costs for each so you’ll have an inkling of the kind of investment you are getting into.
Additionally, these kinds of information are very vital for the development of your business plan.
Another thing to put in mind is paying the rent isn’t the only important reparation you have to take care of every month.
There’s the electricity, the cable TV, heating, air conditioning and other utilities. It’s also a wise move to set aside “emergency funds” for those unexpected needs that pop up [possible fines maybe or a busted shaver you have to replace immediately].
Make this your general rule for starters: if you can’t afford to pay the rent of your dream barbershop then, better not open one at all.
How to take on help and build a team
When is the best time to think about expanding and hiring employees? Get your shop established on firm ground first and you’re good to go.
And if you want to do so, you have these three preferences to choose from — are you going to give them a salary, pay them by commission or have them rent out your booths/chairs?
Regulations about these kinds of work arrangements vary from state to state.
You can ask advice from your local barbering/cosmetology board about this matter for you to have ideas on what to adopt when you do go and open up for employees.
On top of that, each work arrangement has its own tax rules you have to be aware of.
Salary/Commission – If you’re thinking about giving your employees salary or paying them by commission then, hopefully, you won’t have your hands full of competing workers fighting tooth and nail on whose client is who.
Your customers can just walk in to get the best haircut/shave experience in their lives. With this work arrangement, you have to be hands on when it comes to your business’ daily operations including marketing, promotions and advertising.
Chair/Booth Rent – this work plan allows for a more hands-off approach, thus, giving you more time to devout to your own clients with the assurance that at the end of the day, you’ll get the agreed upon fixed payment from your tenants.
Working alongside chair/booth renters in your barbershop also has its perks — you get to enjoy good camaraderie with them, the friendliness adding charm to the place’s ambiance. One little reminder: New Jersey and Pennsylvania do not allow this type of work arrangement.
Commission – Chair/Booth Rent Combination –This approach is the most ideal and mostly liked among the three as it gives your employees/tenants the most options when it comes to how they like to work.
And if you’re chair/booth renters and employees are happy then, they’ll most likely stick around longer. Client-wise, the customers who come in will really enjoy the feel of a place that has SATISFACTION stamped all over it.
However, you might not like the consequence that comes with it — dealing with the varying tax regulations that come with these two different working arrangements.
Accounting is one of the dullest aspects of business for most barbers…but it’s a fact of business life you can’t avoid.
Barbershop owners need to work on their tax papers at least once per year [some business types do so quarterly].
If you’re not the sole owner of your venture then, you should get an accountant on board [though a lot of sole-proprietors also hire accountants]. To file your taxes the correct way, you must have records of your sales intact together with the receipts and invoices of your rent, supply orders and other business-related expenses.
If you have other barbers working in your shop, you have to pay close attention to what category their working arrangement with you falls in the IRS classification — as employees or independent contractors.
Again, this varies from state to state. For instance, even if the barbers working in your place are paid on commission and they have their own clients and tools, the IRS may still consider them your employees instead of being independent contractors.
Classifying the barbers who work on commission or rent booth/chair in your shop as either independent contractors or employees is very crucial.
A lot of barbershop owners categorize them incorrectly classifying them as independent workers when, in fact, they should be filed up as employees. With incorrect classification comes the high risk of paying heavy fines when the IRS comes and does the audit.
The IRS published a guide for barbershop owners, though, to avoid this dilemma. The “Employee VS. Independent Contractor” section in the said write-up gives clear points on how to determine the independent worker from the employee and here’s what it says:
- A barber in your shop is considered an INDEPENDENT CONTRACTOR if . . .
- He is a chair/booth renter, brings, uses and furnishes his own tools for work, sets his own working hours and just pays you a fixed weekly/monthly fee as his rent.
- He pays minimum rent with the potential of increasing depending on his gross sales, determines his own working hours and collects payments from their clients though you, as the barbershop owner, supply him the barbering equipment he needs.
- A barber in your shop is considered an EMPLOYEE when . . .
- He earns money by commission and you control his working hours.
- You pay him by commission. He is still considered an employee though he uses his own tools, sets his own working hours and even has his own key to your shop.
Other business arrangements you might want to consider
Partnership – Maybe, you have a friend who’s good at handling business. Forming a partnership with him may be the formula of success you’re looking for. Being the experienced barber, you take care of the haircutting/hair grooming aspect while you let your partner manage the business side of things — a win-win situation!
Cooperative Model – Adapting the cooperative model allows the other barbers in your shop to have a bigger chunk of ownership rights, thus, letting them have a bigger share of the gains and the risks involved in running the venture. You can start by giving them incentive bonuses where you give bonuses at the end of the year when the annual profit of the barbershop go beyond what you expected. Over time, you can make the best barbers your business partners.