Rent a chair or employees for your salon? Which is best?

Are you struggling to recruit employees with experience and talent right now? It’s proving a big problem for many salon and clinic owners after months of pandemic.

Businesses who previously ruled out the freelance model are now wondering whether to take the plunge and rent out a chair, space or room to a self-employed hairdresser, beauty therapist or aesthetic practitioner.

If renters sound like a great idea to you, don’t rush in.

There’s a lot to think about. Make sure you understand everything that’s involved before deciding if going down the freelance route is the right business choice for you and your salon or clinic.

I explain the key points salons need to know about chair, space and room renting:

1. What is chair/space/room/booth renting?

2. Is it for your salon? The pros and cons.

3. How much should you charge a chair/space/room renter?

4. Reducing the risks.

5. Can your existing employees become renters?

6. Taking on a beauty therapist renter in a hair salon or a hair stylist renter in a beauty salon.

7. Proving your renter is truly self-employed and not a salon employee.

8. The importance of legal advice and a watertight agreement.

In this guide, I’ll take you through the most important aspects of renting out a chair, booth or room. Look out for the Learn & Grow icons and follow the links for more detailed information and ideas on related salon marketing topics.

First, let’s be clear about what we mean:

#1. What is chair, space and room renting in salons?

Don’t invest in anything that you don’t understand. Do your research first.
– Paul Clitheroe

Stylists and therapists who rent a chair, space or room:

• Are self-employed and completely independent from your business.
• Have their own separate client list.
• Sort out their own business accounts and tax returns.
• Make all their own decisions about how to run and market their business.

The options for your salon are to have:

• Employees only.
• A mix of employees and renters (independent contractors/freelancers).
• Renters only.

It’s your choice, but it’s vital to understand the pros and cons of having renters in your salon.

My view is that there are some serious pitfalls for your salon business, especially where you have a mix of employees and freelancers. But there are positive aspects too, so no easy answers. Find out more below.

#2. Is chair, space or room renting for you? The pros and cons

For me, a major disadvantage of chair, space and room renting for salon owners is that you lose control of your:

• Brand.
• Image.
• Client experience.
• Culture.
• Marketing.

In other words, you’re no longer fully in charge of your business. Are you prepared for that?

Let’s look at the pros and cons in a little more detail:

The salon pitfalls

1. It’s their OWN hair, beauty or aesthetic business

A renter is their own boss and can decide:

• Which days to work and for how long.
• The type of clients they want to attract.
• The treatments and services they want to offer.
• What they post on their social media.
• How much to charge their clients.
• How they will dress for work.
• How they will advertise and market their business.

You will have very little control over your chair, space or room renter and the way they choose to run their business.

2. Your salon brand, standards and culture

Online and on social

A freelancer will have their own business social media channels and possibly their own website. How professional their online brand presence is, what they post and how they publicly respond to Comments and/or complaints are all things outside your control. Even though they are operating inside your business premises.

In-salon

Many clients coming into your salon will have little understanding of the difference between a member of staff and a chair/booth/space/room renter. A renter whose approach, appearance and attitude is at odds with your own salon team may put off your regular clients.

In addition, if your renter does not provide a consistently high level of service, your salon’s reputation may be damaged.

3. Team building can be challenging

Motivating and managing a salon team is one of the hardest tasks a salon owner has. If you have a mix of renters and employees it is more difficult to create a positive team spirit as renters are (understandably) loyal to their own business – not committed to yours.

I can see it from the freelancer’s perspective too. They are running their own business, paying their own tax and handing over a ‘rent’ to you.

4. Poaching clients and employees

You are always open to any salon employee leaving, and then poaching clients and your team. It’s called life.

But a freelancer is already self-employed. They are already running a business (within your premises) so the chances of them leaving to set up a salon down the road may be higher than for employees.

Keep this in mind:

• When you take legal advice on a service contract (more of which later).
• Keep your booking systems separate from them.
• Ensure your own valuable client database is password protected.

You will need to think very carefully about all of these pitfalls.

Are you happy to have so little control over what’s going on in your salon?

The salon positives

There are, of course, positives about having chair, space and room renters otherwise no one would do it!

1. Save money with hair or beauty freelancers

One of the biggest attractions is that it will probably cost less than having an employee. This is because you won’t have to make payments such as employee pension contributions, holiday pay, sick pay or National Insurance contributions for your renters.

2. No worries about employment law with rent-a-chair

Also, because renters are self-employed and responsible for running their own business, you won’t have to worry about making sure you comply with various aspects of employment law.

3. Salon start-ups can benefit from freelancers

If you’re a start-up salon with a tight budget and a small client base but don’t want the risk of employing someone, then renting can be a great way to boost your income and pay towards your overheads.

4. Use a room renter to add a new treatment

If you want to introduce a new treatment or service but can’t afford to employ a specialist, a chair, space, booth or room renter may be the perfect solution.

These benefits sound great, but don’t forget to weigh them against the very real pitfalls.

You need to decide what’s most important to you and what will be best for your business.

#3. How much should you charge a chair/space/room renter?

If you don’t know your numbers, you don’t know your business.
– Marcus Lemonis

Don’t forget: you will need to cover all your costs as well as make a profit so be absolutely clear about the outgoings that your renter will need to pay towards. For example, utilities, telephone and Internet, cleaning and maintenance and laundry facilities.

There are three main ways to work out how much to charge your chair/space or room renter:

• Charge a fixed weekly or monthly rent.
• Take a percentage of their earnings instead of charging rent.
• A combination of the two (the best option for salon owners in my opinion).

Find out more:

1. Charge a fixed weekly or monthly rent

This is clear and straightforward as you’ll both know where you stand.

However, you could miss out if your hair or beauty renter is ultra-busy as you won’t get to share the profits.

2. Take a percentage of their earnings instead of charging rent

This means you get a share of the renter’s profit instead of charging them rent. A common arrangement is 40% to the salon and 60% to the renter.

However, your income will fall dramatically if your renter goes on holiday, reduces their hours, is off sick or goes through a quiet patch.

3. A combination of the two

I believe this is the best option for salon owners.

You charge a lower fixed rent plus a lower share of the renter’s profits.

This means you will always have at least some guaranteed income.

But – you may have to overcome objections from your renter who could feel that you’re ‘having your cake and eating it’.

#4. Reduce the risks of renting out a chair, space or room

Risk comes from not knowing what you’re doing.
– Warren Buffet

There are risks involved in taking on a chair, space or room renter. But you can take steps to reduce these and give yourself the best chance of making things work out to your benefit.

For example:

• Set up a rigorous selection process – just as you would when taking on a new employee.
• Always ask for references and verify them with the referee.
• Carry out an initial interview (this could be over the telephone or online) and then a face-to-face interview.
• Include a trade test in the selection process.
• Involve other team members in the selection process – especially if they are renters too.
• If they are currently working somewhere else, you could try a mystery shop.
• Check out their social media platforms. Like what you see?
• Always put a legal chair, space or room renting agreement in place which includes a probation period of two or three months. See more on the importance of legal agreements below.

#5. Can your existing employees become renters?

Do your homework before you sign on the dotted line.
– Patricia Scherschel

Be careful if your existing employees are interested in becoming chair, space or room renters.

You will still need to be very careful if an employee wants to become a renter in your salon. This is because the law may see this as a redundancy situation.

Always get legal advice to ensure everything is done properly and legally.

#6. Therapist renters in hair salons and stylist renters in beauty salons

Good fortune is what happens when opportunity meets with planning.
– Thomas Edison

Having a beauty therapist in your hair salon or a stylist working from your beauty salon is a great way to widen your appeal and bring in more business.

But – as ever – you’ll need to think this through and understand what you’re getting into.

This is particularly true if you own a hair salon and want to rent out a space or room to a beauty therapist.

1. Beauty or aesthetic freelancer renting space in a hair salon

Why? Because you’ll need to have some understanding of the beauty industry and how it works. It is different to the way the hair industry operates.

For example, you may need individual and premises licences from your local council and you’ll also want to be sure that your beauty therapist renter has the right qualifications to carry out the treatments they plan to offer.

You’ll also need to be aware of age restrictions when it comes to certain treatments for under-16s and under-18.

2. Hairdresser renting a chair in a beauty salon

It’s probably a little more straightforward if you own a beauty salon and want to rent out a chair to a hair stylist – but I’d say it’s still vital to do your research and gain a working knowledge of the hair industry before going ahead.

#7. Proving that the freelancer is truly self-employed and not an employee

A lack of clarity could put the brakes on any journey to success.
– Steve Maraboli

This may sound a bit boring, but it’s vitally important.

The UK law says that you must be able to prove that your chair, space or room renter is genuinely self-employed and not an employee.

Don’t be caught out as this may cost you a lot of money in backdated tax, employee payments and penalties.

You must ensure that your renter:

• Decides their own hours and days of work.
• Sets their own prices.
• Has their own clients.
• Decides which treatments and services to offer.
• Pays for their own training.
• Decides which products they will use and sell.
• Wears their own choice of clothes to work.
• Keeps their own separate business accounts.
• Pays their own tax and National Insurance.
• Deals with any complaints or legal action from their clients.
• Has their own business insurance.
• Is free to do their own advertising and marketing.

You must not:

• Have your renter on the payroll.
• Supervise or manage your renter.
• Pay them sick pay, holiday pay or maternity pay.
• Pay their National Insurance.
• Pay into a pension for them.
• Pay for their training.

Remember: It’s best practice for your renter to take payments from their clients using a payment system that is separate from the one used in your salon.

Keep a detailed record of all financial dealings between you and your renter.

Make sure you have a legal chair, space or room renting agreement in place. See more on this below.

#8. The importance of legal advice and a watertight agreement

Until the contract is signed, nothing is real.
– Glenn Danzig

I cannot stress this one enough.

You must have a watertight legal agreement in place before your renter starts work in your salon.

The agreement must be signed and dated by you and your renter. The agreement will help to:

• Avoid confusion and conflict.
• Show that your renter is self-employed and not an employee (see more on the importance of this above).

Always get legal advice about this, but the agreement should cover in detail every aspect of how things will be organised between you, including:

• How long the agreement will last and how it can be ended.
• How much and how often your renter will pay you and what they will get in return.
• What exactly the payments will cover. Products? Utilities? Cleaning services? Equipment? Reception services?
• What happens if things don’t work out.
• If a locum can work in your salon when your renter is off sick or on holiday.
• Which days of the week they have access to your salon and how this will work.
• A clause to prevent client poaching.

Members of the UK trade body the NHBF have access to chair, space and room renting agreements.

Freelancers or employees? Which is the best for your hair or beauty biz?

For me losing control of your salon brand, client experience, culture and marketing is a big hurdle.

That said, if you’re a start-up with a tight budget and don’t want the risk of employing someone, then renting a chair or room is a useful way of getting extra income. Or if you want to introduce a new service but can’t afford to employ an experienced specialist then a freelancer may be your best entry route.

Just make sure you go in with your eyes open.