Buying a Business: Converting Booth Renters to Team Members
Karie Bennett, owner of two Atelier Salon locations near San Jose, California, is no stranger to opening salons. She has built out new locations three times in her history as a salon owner, and is very familiar with all the bumps in the road.
But when it came to opening her third location, everything was different. This time, she was buying an existing salon rather than creating her own space. She was also purchasing it with a partner—something she had never done before. And, probably the biggest challenge she faced—her brand-new, built-in staff were all independent contractors.
Sound daunting? She was also attempting to achieve the sale and opening of the salon in the last two weeks of December—a time when the whole country goes on vacation.
“We opened on January 2,” Bennett says. “The salon never missed a day. We went into the building on New Year’s Day and took things down off the wall, fixed electrical issues and deep-cleaned everything—we threw out about 20 bags of trash.”
She also had to do a database integration to get the old salon’s software, which was STX on Macs converted over to Atelier’s—SalonBiz on PCs. Bennett didn’t even receive the salon’s database until January 1, the day the sale went through.
“But the clients were happy and accepting because their stylists and color formulas were here,” Bennett says.
“Our main goal was not to disrupt business for the client or the stylist. We even had sparkling wine and cider the day we opened and gave away little gifts.”
Change is Good
But before any of this happened, Bennett made the decision to partner with the manager of her two other locations, Rob Willis, in buying the salon. While she had never taken on a business partner before, it felt right with Willis.
“I have never had a partner and never thought I would have one,” Bennett says. “I’ve not always heard great stories about having a partner. But Rob has been manager here for about four and a half years and he picks up where I leave off and vice versa,” she says.
“His strengths are places where I’m not strong, and I handle things he doesn’t.”
“We communicate well and he has really cared about my business as general manager in a way I never thought I would see—he has some emotional ownership of it.”
When Bennett asked Willis point blank if he had ever thought of opening his own salon, he told her, “Not by myself. But I’d consider doing it with you.”
Bennett says, “Your best friend at work is generally your general manager. They know all the secrets of your business and they’re the one person you can talk to about all the confidential stuff.”
With mutual trust and the ability to agree to disagree, the two make perfect partners. Once they agreed on that, it was time to find the perfect location.
“Over the past three years, we probably looked at six businesses,” she says. “Some required a new buildout, others were existing locations, which was attractive to us. I’ve built out three times before and it’s really expensive. You have to create everything yourself and it’s a long process.”
So Bennett and Willis decided if something came up that was in great shape already, and could just be improved upon, that would be their preference.
“As a hairdresser, I do that all day,” Bennett says. “I take hair and refine it—that’s where my creativity lives.
“Also, as far as the financial aspect—you don’t have to spend as much money on something that already exists.”
So in October, when an opportunity became available, Bennett and Willis jumped on it, and in December, the process picked up speed.
“The seller really wanted to make it happen before the new year,” Bennett says. “So we were kind of pushed into getting it done sooner rather than later.”
The problem with this plan was in the details. To purchase a business, a lot of people are involved—lawyer, landlord, city employees, etc.
But the main issue was getting the computers and credit card system up and running. With the help of SalonBiz, they were able to do it in two short weeks.
“There were people in their office helping us when they should have been off for the holidays,” Bennett says. “They made it as easy as possible.”
Getting ahold of other important people wasn’t as easy. “I was talking to my new landlord while he was literally on the ski slopes,” Bennett recalls.
Converting Independent Contractors
Eventually, Bennett got all her I’s dotted and T’s crossed and saved some of the business details—like licensing—until after the salon was open and everyone was back to work in the new year.
All of these hurdles were nothing though compared to Bennett’s biggest concern—her new staff. The previous salon’s employees were all independent contractors. And for Bennett’s new business to work, she needed them to stay and convert to a traditional salon environment and commission pay.
“We went in to meet them and give a presentation,” she says. “The old owner told them it was going to happen, but I was really nervous. I really wanted them to like us and see the value of working for Atelier.”
So she did her homework. Before the meeting, Bennett and Willis went to the Professional Beauty Association’s site (probeauty.org) to research renters versus commission.
Using the calculator on the site, they ran some scenarios, and each time they did, the employees benefited by working for Atelier rather than being an independent contractor.
“They came out ahead because we pay taxes, credit card fees, take care of benefits, overhead, etc.,” she says.
“We take care of business so they can take care of the client—that’s all they have to worry about.”
Bennett says, “They also came out ahead because of the reputation Atelier has already established. We felt like we had something really special to offer them and invited them to come interview with us at our other location.”
Once the employees toured Atelier, met current staff and saw how busy and friendly everyone was, they were convinced. In fact, they really didn’t need too much persuading at all.
“When we did one-on-one interviews they told us they knew our reputation and they were already thinking of applying with us. They were missing the team aspect of working in a salon.”
Happy with the arrangement and ready to sign on the dotted line, the new employees are now thrilled to be part of the Atelier team.
Bennett now has 56 employees and dropped from three days a week behind the chair to two. On the day she’s not doing hair, she’s at the new salon.
The most difficult task she has now is bringing the Atelier culture to the new space.
“Even though they know Aveda, they don’t know Atelier,” she says. “But one of our managers ended up coming to this location after a move, and she brings the culture with her every day. She knows how we do things and the new stylists are completely open to it.”
Bennett doesn’t know how she got so lucky, but is thankful it all worked out and is happy she didn’t pass up the opportunity because of the obstacles.
But for any other owner considering opening a new location, she offers this advice: “Try not to do it at the end of the year!”