Successful Salon & Spa Management – Chapter 1 – Workbook Questions – Flashcards

They have gone from small beauty salons and barber shops that were run solely by the owner. One license usually covered anything that pertained to their business. Now the states require a series of sublicences for each individual category. Each state has different requirements. It is important that new salon and spa owners know and understand all of the laws.

1. Read and follow the licenses required for business ownership. 2. Determine exactly what services your establishment will offer and make a list. 3. See what licenses are needed to be able to carry out these services and how the establishment should be licensed.

1. Hotel salons and spas 2. Department store/fitness center salons and spas 3. Mall/Shopping center salons and spas 4. Freestanding salons and spas 5. Medical Spas

hair services full body massage make-up hair removal body wraps Botox injections manicure acrylic nails pedicures false eyelashes permanent makeup

Cosmetology/Barber Board Medical Board

Sign restrictions Cleaning and Maintenance Agreement Charge System Open and Closed hours Decorating Agreement Subcontractor Clause Dispute Settlement Agreement

The department store usually orders supplies by mass purchasing.

1. The image and clientele 2. How much marketing the store will do 3. Who has the final word on complaints and adjustments 4. Who will do the hair of the fashion models hired for styles show and how and when those arrangements will be made. 5. employee benefits, parking permits, credit cards, accounting procedures, decoration coordination, marketing, production time, etc.

The use of the store lunchroom/cafeteria Employee discounts paid vacation sick pay (sometimes) group insurance profit-sharing (sometimes)

The rent is determined by a leasing agreement and may involve a flat rent plus percentage after a certain level of gross sales is reached.

Location Type of Mall State of the Economy

Helps to solve the common problems of doing business, such as snow removal, liability insurance, parking lot lighting, trash collection, and common maintenance.

It may be more cost-effective because much of the work to set it up may have been done for you.

1.It becomes more valuable as the payments are made to own the building, land, and/or equipment 2. If it is owned by a landlord, they will typically be responsible for the upkeep of the building and land. (The value of the salon itself would be in the equipment and business and not in the building and land.) 3. If the owner lives in the salon the percentage of the building that is used for the salon is tax-deductible.

It typically combines western and holistic medicine with spa services to create a relaxing, luxurious atmosphere.

A sole-proprietorship is owned by one person, usually the individual who is running the business.

1. Easiest and least expensive form of ownership 2. The proprietor is in complete control of their own business.

1. General Partnership - responsibility and profits are shared. 2. Limited Partnership and Partnership with limited liability - most partners have limited liability and input regarding management decisions. (These partners are typically just financial investors.) 3. Joint Venture - Like a general partnership, but is for a limited period of time or a single project.

It is considered a unique entity, apart from those who own it. It can be taxed, sued, and enter int contracts. The owners are shareholders and they will elect a board of directors to oversee major polices and decisions. It does not dissolve if ownership changes.

Subchapter S Corporations 1. It is a tax election that allows the shareholder to treat the earnings as profits and distributions and have them pass through directly to his or her personal tax return. 2. If the shareholder is working for the company he must pay himself wages that are standard for the region. Limited Liability Company (LLC) 1. It provides the limited liability features of a corporation ant the tax efficiencies and operational flexibility of a partnership. 2. The owners are members and the duration of the LLC is usually determined when the organization papers are filed.

Because of their marketing and organizational strengths.

Strong consumer marketing group purchasing power uniform bookkeeping system centralized training exclusivity of product line help with interior design group insurance rates for malpractice and liability group health insurance for employees

They purchase it when the company is formed or earn it as part of their compensation.

Minimal/non-existant business growth High staff turnover Inability to manage and educate staff Lack of quality control standards Infighting and lack of teamwork Exposure to tax audits Inability to sell other salon and spa services or products

It should clearly identify the salon and spa It should be short and memorable It should not be so trendy that it becomes dated when styles change

STRONG Avalon Salon and Spa - makes the type of business clear La Dolce Vita Salon - Short and Memorable Avanate Hair Trends - Not so trendy that it would become dated WEAK Avalon - doesn't explain what type of business it is Jake and Ann's Tonsorial Parlor for Upscale Male Hair Styling Services - too long, no one will remember all of the wording Avante Hair Salon That "Rocks" - Rocks is trendy and the name will be outdated when it goes out f style.

1. The proprietor is legally responsible for all debts against the business. 2. The proprietor may have to fund the business with personal funds and personal loans.