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  • #965338
    Kaiz
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    Hi everyone,

    I have finally decided to take the plunge and start my own business. I have a background in financial industry having worked in financial department of small to medium size businesses for the past 10 years. I wanted a carrier change and found an excellent opportunity to do so by buying a franchise in an industry that have great potential for the future, the green industry. Both my partner, who happens to be my wife, and I were excited about this opportunity. She has a background in marketing.

    So after much work put in to go ahead and sign the franchise agreement to start our solar business, another franchise opportunity is being offered to my partner in the hair salon industry. She is keen to go ahead with both projects.

    The hair salon is an existing business that has gone downhill after not being managed properly. It has a great potential to flourish again and is being offered at a price that could be qualified as cheap.

    The solar business is a start up business but would be located about 100 miles from the hair salon. We would start both businesses pretty much at the same time. The idea would be for her to work full time there at first and get a manager after a while. In the meantime I would get the solar business going.

    We would be able to afford both start up cost and left with only a little cushion if things get dirty.

    I foresee a few issues that will arise pretty quickly and which I am afraid would put a lot of pressure on us, both professionally and personally.

    So what do you think an entrepreneur in his right mind should do ?
    go ahead, hold tight and work hard until we get things on track with both business? pick one, we can’t manage both?

    #1011309
    FletcherTax
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    Hi Kaiz

    Some food for thought for you if I may

    1/ Can you survive financially (ie have enough to live on for the lifestyle you are used to) on the salon income alone, after franchise fees?
    2/ I’m worried about the “little cushion” available if things get dirty. A start up business almost always has costs which were not budgeted for in the beginning.
    3/ What makes the franchises so attractive? Location? Marketing? Branding? Training? Can either business be set up from scratch?
    4/ Have you and your partner had any prior experience in running a business? Or within the green industry? Or hair salon industry? Or does the franchise provide suitable/adequate training?
    5/ How would running both businesses impact on your family lifestyle/time?

    Truly sorry if any of the above seemed harsh. But your obviously being presented with two very attractive offers so just trying to provide some further unbiased views.

    Happy to discuss these and other questions that come to mind,

    Fletcher Tax Accountants
    ww.fletchertaxaccountants.com.au

    #1011310
    Kaiz
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    thanks for your answer

    1/ Can you survive financially (ie have enough to live on for the lifestyle you are used to) on the salon income alone, after franchise fees?

    Yes

    2/ I’m worried about the “little cushion” available if things get dirty. A start up business almost always has costs which were not budgeted for in the beginning.

    already budgeted for those unforseen cost

    3/ What makes the franchises so attractive? Location? Marketing? Branding? Training? Can either business be set up from scratch?

    The salon business is located in very good spot and has a very good branding. Of course we could set up the salon business from scratch but the risk associated and cost compared to franchise option is not worth it
    The green business need to be done via franchise. It can be quite technical and therefore need a bit of training.
    Both franchise offer good training programs.

    4/ Have you and your partner had any prior experience in running a business? Or within the green industry? Or hair salon industry? Or does the franchise provide suitable/adequate training?

    We have never ran a business before and my wife has little experience in hair industry.

    5/ How would running both businesses impact on your family lifestyle/time?

    that’s what worries me the most in fact. I would feel more comfortable if hair salon was closer to where we have planed to open the green business.

    #1011311
    BrightBiz
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    Hi Kaiz,

    My husband is a hairdresser, and I would advise you to be VERY careful before buying any salon. It is always extremely difficult for a non hairdresser to manage a salon effectively, this is due to many factors, but salons are often a very unstable business to buy even if you are a hairdresser.

    Again, having experience in the hairdressing industry for almost 15 years, I can tell you we wouldn’t buy into a franchise. Most do not have a good name with hairdressers or clientelle and they can be extremely limiting when you want to change services or prices etc. That being said there are definitely people out there who own one or multiple of these salons and make money.

    Hairdressing is a competitive and B**chy industry, product costs can be high, and you are relying on staff to build a clientelle and keep them, this is where the money is, BUT a great staff member will almost always take a majority of their clients with them when they leave, people will follow their hairdresser, this is one reason it is hard to manage and own a salon if you aren’t a hairdresser yourself, because you need to have awesome staff who are loyal and aren’t going to waste product, are willing to rebook appointments and upsell.

    There’s lots to know and it’s LONG hours. Ask any hairdresser they’ll tell you getting set lunchbreaks is a rareity as are sick days, hard to organise holidays etc because you always have clients relying on you.

    I’m not saying don’t do it, just that you REALLY need to understand the industry and go in eyes wide open!!

    Salons can be a very lucrative business if they are in the right area and have the right staff, but mostly in the years my husband has been in the industry, they do ok and many are sold cheaply or closed down.

    If you have any specific questions message me on here and I’ll ask hubby for you :D

    #1011312
    Kaiz
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    Thanks BrightBiz, great insight there…

    Well the one we are planing to buy is in a big shopping centre and has been around for over 10 years. It is a store that has a proven track record.
    Revenue figures were outstanding 2 years back but kept deteriorating. too many staff, wrong products…
    It is a forced sell by the franchisor, sold with no goodwill.

    BrightBiz, post: 11702 wrote:
    but mostly in the years my husband has been in the industry, they do ok and many are sold cheaply or closed down.

    Quite interested to know a bit more precisely what you mean by that.

    #1011313
    BrightBiz
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    All I mean is that many hairdressing salons just keep themselves above water, the owner is generally a hairdresser who is in there working full time and staff come and go.

    Once the owner has done their time, generally when they try to sell a salon it sells quite cheaply, and often not at all so is simply closed down.

    With what you are buying is it a “cuts only” style salon or full service? That will make some difference. It’s not that salons can’t make money don’t get me wrong, they can but very few salon owners will have the ability to sit back and watch the money roll in.

    Look, that’s just my opinion of course, it also depends on if you are regional, metro, full service or limited service, long term staff or high turn over, based on a large clientelle base or majority are walk ins.

    Full service you have much higher product cost (think colours, treatments, peroxides and processing, perms, styling products etc) Limited service you will have much less stock to hold and control, and then of course there’s retail.

    Building the reputation of a salon back up is much like building the reputation of a restaurant back up when it’s known in town to be horrible food. Remember, people follow their hairdresser generally speaking, you need to be sure there are good hairdressers that people like and can do a great job, if nobody in town is happy with the hairdressers then just a change of management won’t help the salon grow.

    Let me know if you want any other feedback or ideas, hubby gets home in an hour or two and would probably have further insight for you :)

    #1011314
    Hugh Thyer
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    If your wife has a background in marketing, then do you really need to buy a franchise? You’re restricted in the marketing you can do in a franchise, so perhaps you’re not playing to your strengths.

    #1011315
    Jason McIntosh
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    Hi Kaiz,

    I suggest you consider pooling your resources (financial and human), rather than dividing them.

    Making a success of your first business will likely be one of the most challenging things you ever do. Fighting on two fronts simultaneously might just be overwhelming. There’s a lot to be said for doing one thing well.

    There is no hurry. The race is long, so I suggest you take the time to get your first business right before branching out.

    If you do decide to buy or set-up a second business, think about one that compliments your existing operations. For example, a hairdresser may try to gain economies of scale by opening another salon – thereby having more bargaining power with suppliers.

    Another example may be a hairdresser looking for opportunities to manufacture their own products which they can then sell in store and to other salons – the business schools call this vertical integration.

    I think you would have to be pretty creative to find many synergies between a salon and a solar business.

    The obvious risk to me with the salon (or any business for that matter) is not having experience in the industry. The last thing you want is to be in a situation where the key person is someone other than you.

    With a salon, I would think the stylist/s is the most critical person, and you cannot perform that role. You probably also want to avoid being a junior to one of your staff – it sends conflicting message as to who is the boss.

    Good luck with whatever you choose!

    Jason

    #1011316
    Kaiz
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    Thanks Jason, some sound advice there. I will let you know the outcome. Either way not an easy decision.

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