So you’ve decided to open your own salon. You’ve chosen the area you want to build your business in, and you’re ready to find the perfect space. But before you sign that lease, there are some big decisions to be made with careful thought and consideration.
Heath Smith, co-founder of Ruiz Salons in Austin, Texas, has two locations and a proven formula for maximizing his square footage for the greatest profitability. Download the tool below to determine your revenue per square foot.
Here are his go-to strategies for creating a successful, sustainable business.
Don’t Go Too Big
Smith says he and co-founder Allen Ruiz have determined that the 5,000 or 10,000-square-foot salons of the past just don’t make sense for them any longer. A space between 2,500 and 3,000 square feet is ideal, and while not huge, offers plenty of room and options for growth.
“We have one salon that’s 2,500 square feet and one that’s 2,900,” Smith says. “I know I can run a five-day work week with a single shift per day and make that size salon space profitable. But it also gives me room for a split shift environment and to be open seven days per week.”
In Smith’s bigger, flagship location, he split shifts with 18 chairs. A team of stylists works 7am to 2:15pm, then from 2:45pm-10pm an entirely new team comes in.
“We’re in an urban area, and when we polled our clients, we found they wanted us open both earlier and later, which works for split shifting,” Smith says. “We were also mindful of their desire for us to be open seven days a week.”
Know How Many Stations You Want and Plan for Growth
Smith says a good formula for how many stations you can get out of a space is to take the overall square footage and divide by 150. “This tells us how many stations we can reasonably expect considering all of the other activities that have to occur in a salon” Smith says.
“We roughly use 20 percent of our space for cutting, 20 for color, 20 for back of house (break room, offices, etc), 15 for retail and 10 for the shampoo bowls.
“It is definitely better to have a distribution plan in mind before you start spending money with an architect and contractor. Be clear on how you’ll be using the space.”
Set Your Ideal Revenue Per Square Foot
All the decisions you make as a salon owner from how you staff to your hours of operation will stem from your revenue per square foot goal. Determining this can be tricky, so SalonBiz has created a calculator to guide you through the process and get you to the correct number.
“Our target is to have all locations producing over $1000 per square foot annually. Smith says. “Our newest salon (open four years) is at around $700 right now, so we’ve been working on getting the formula just right to set it up for success.”
Smith says revenue per square foot greater than $500 is ideal, and to plan for at least three years in business to get to that number.
The bigger Ruiz location is split shifting, and consistently producing over $1,000 per square foot annually, and location number two is progressing towards that.
“The neighborhood that salon is located in is growing, and we’re growing with it,” Smith says.
Reassess as You Evolve
For 10 years, Ruiz had a spa within its main location. But about four years in, Smith realized the business could no longer afford to offer nails.
“The production per square foot was so low compared to hair or waxing—it couldn’t justify itself,” he says. “We couldn’t generate the dollars per square foot the way we wanted to. So even though clients still wanted it, we converted the space to waxing, which was much more profitable. Don’t be afraid to question the original build out decisions you made as time passes and the economy changes.”
In 2009, Smith was forced to reassess again. “We needed more space. Our lease needed to be renewed, and we had to make a tough decision about going forward in that poor economic environment, so we eventually eliminated spa altogether. We knew we could drive the production per square foot in hair so it only made sense to focus where the biggest opportunity was..”
Plan Down to the Last Inch
Smith advises looking at your own market when planning your space. “In New York City, you don’t need break rooms, but I’d have a mutiny if I didn’t have one here in Texas. Know what’s normal in your market.”
You should have an idea of how many chairs you want, and know what will take priority.
At Ruiz salons the color area gets first priority when planning a new space. Color needs its own plumbing, sinks and bar, making the whole area it’s own contained space.
“We have pretty exact dimensions for color,” he says. “As a specialized salon, we’re clear about the needs of the colorist and share details with our architect. With the cutting stations, we’re more flexible and have tried varying layouts over the years as space allowed.”
Defining the color space and building the rest of space around it works well for Ruiz, and Smith recommends prioritizing an area and then going from there.
“We look at service areas first, then the shampoo area, then public spaces like waiting/seating, next retail and reception, and lastly back of house (including laundry storage, break room, etc.),” Smith says.
Manage your builders tightly and always look for ways to save on space.
“We put false panels in walls for storage of stuff you don’t need access to on a daily basis,” Smith says. “Don’t dedicate valuable low square footage if you could store up high. We’ve also built fake wall panels for paper products in the bathroom to eliminate big storage rooms.”
Avoid Common Pitfalls
Choosing a space that’s way too large or way too small is a common mistake new owners make. Smith says either way, you won’t be as profitable as you could be.
“If you can’t produce that $800 per square foot annually, your space isn’t the right size or you’re not using the right recipe,” he says. “Once a salon is built, it’s built, and it will cost a lot of money to fix what you just spent good money on.”
To avoid building errors, work through your blueprint with an architect BEFORE you sign a lease. And don’t be afraid to walk away from your dream space if it’s not going to suit your salon’s needs.
He also advises to be on the lookout for architectural impediments like columns or other interior structures that limit use.
“You could lose 200 square feet because of a column,” he says. “In the grand scheme of things, wasting 200 square feet over a 10-year lease isn’t worth it. That square footage could be making you money if used properly.”
Tiny decisions like this can be traced back to lost profit. Have a plan, be committed to it, and walk away from a lease that won’t accommodate your needs.
To determine your ideal revenue per square foot, download the calculator now.