Tangles Salon and Spa in Denver is a perfect example of the booth rental model gone right. With a team that has grown to 11 beauty and wellness specialists, this establishment offers everything from hairstyling and deluxe facials to advanced exfoliation, facial waxing, massage, and tanning services. As independent booth renters, each professional sets their own prices and hours, and sees their own clients. Working as independent contractors allows the estheticians at Tangles to keep all the profits they earn, and they are only obliged to pay their taxes and a monthly rental fee.
Generally speaking, renting space in a salon or spa is the best way to maximize your profits short of opening your own successful salon or spa. However renting a space can also be more risky. The most common progression for estheticians is to start working as an employee, and then to build up enough clientele to start making the transition to greater independence by renting a booth in a salon or spa.
While many take this route, it is by no means set in stone. Plenty of estheticians are happy working as employees or on a commission basis for their entire career, while others start by renting a booth and never look back. The factor above all else that most determines your success as a booth renter is your own motivation and professional drive.
When considering booth rental at least one thing is certain: this business model is for estheticians who are more inclined to be independent.
*According to state law, Pennsylvania and New Jersey do not allow booth rentals.
What it Takes to Be Successful as an Esthetician Renting Space in an Established Spa
As a booth/room renter in a salon or spa, you are essentially an independent business owner who pays a weekly or monthly rental fee to the establishment owner. You keep all your profits, charge your own prices, buy your own supplies, see your own clients, and are responsible for business activities like advertising and taxes.
When thinking about whether booth renting is right for you, consider these elements, which are essential for success:
- Skills as an esthetician
- At least basic business management skills (or the willingness to hire someone who has these)
- A sufficient amount of clients
As obvious as it may seem, it’s important to mention that you need to have strong basic esthetician skills to be successful as a booth renter. As great as your personality undoubtedly is, you must have experience performing all the essential services expected of estheticians – and be able to do them well. You are not going to develop a loyal base of clients if you can’t do your job, and conversely, demonstrating skills as an esthetician will earn you genuine respect in your trade among the clients you work with and your peers within the industry.
Business Management Skills
Not only do you need mad skills as an esthetician; you need to be able to manage a business if you want to rent space in a salon or spa. Business skills are one of the main factors that separate a successful booth renter from a salaried employee. You must be adept in:
- Basic expenses and budget management – you need to juggle things like monthly booth rent and supply costs
- Marketing, advertising, and promotions – as a business owner you are responsible for all of the important aspects of attracting new clients
- Taxes – you need to navigate your state taxes as well as a 1040 Schedule C and federal self-employment tax for Medicare and Social Security
If you lack the business prowess or simply want to focus more on your trade, you can always hire a business manager, but this will eat into your profits.
Sufficient Amount of Clients
Unless you have an absolutely awesome location that brings in more walk-in clients than you can handle, you will need to have a loyal base of clients to make booth rental feasible. The most common way estheticians establish this list is through years of good work to develop regular clients who make appointments on a first-name basis. As a general rule, you can start thinking about a booth rental arrangement once you have a loyal client base that allows you to earn enough to pay your weekly rent in the first day or two.
The Natural Progression Towards Booth Rental
While the following model is by no means required, this is the path that most esthetician room renters take:
You’ve earned your esthetician license after graduating from school or an apprenticeship. Your first step will be to find a job – most likely as an hourly or commissioned employee. After a few years you learn the business end of being an esthetician and also hone your skills working with a wide range of clients. In fact, you’ve got such a loyal base of clients that you’ve done the calculations and determined you’ll make a profit if you move to the space rental model.
The nice thing about following this progression towards booth rental is that you can calculate exactly how much you will need to make in order for booth renting to be worthwhile. Just consider your costs – how much you must earn each week/month – versus how much profit you want to make. Take the following example:
A Model for Performing a Booth Rental Cost-Benefit Analysis
- Monthly booth rental – $320
- Monthly cost for your esthetician and business supplies – $50
- Annual taxes divided by 12 months – (monthly profits multiplied by at least 15%) say $375 for this example
- Your personal monthly living expenses (rent, food, transportation, and extras) – $1,000
- Total monthly expenses – $1,745
According to this example, you should have enough guaranteed clients to make at least $1,745 each month, and that is just to tread water. You’ll want to actually turn a profit and will therefore need to bring in more than just this minimum. If you want to net $30,000 in a year, that means you’ll need a profit of $2,500 per month, which translates into a monthly gross of $4,245. Divided into 20 working days per month, you’d need to make about $212 each workday.
Being a responsible business owner, you will also want to aim higher than your minimum profit margin out of recognition that things may not go as you plan each month, and you will need a cushion to absorb unforeseen expenses such as a month where your clients happen to be on vacation.
Another way of determining if it’s worth switching to booth rental is to weigh how much you are making as a wage/salary/commission employee versus how much you project you’d make as a booth renter. If the margins are much higher as a renter then that’s another good indication it’s time to take a risk and make the transition.
What these models don’t show is an initial investment you must make in purchasing your own esthetician supplies and products. This will probably cost upwards of a few thousand dollars. Luckily, you can research exactly how much supplies cost before you take the leap to becoming a renter.
Where You Can Rent Space
Each salon or spa owner is different. Some prefer if you rent space, some prefer to pay you a wage, and some have a combination of both renters and salaried employees. Chances are that even if you live in a small city there is a salon or spa where you can rent a space or operate as an independent business owner.
A 2016 nationwide survey of rental opportunities for estheticians revealed the following offers, provided here for illustrative purposes only (not representing offers of employment):
- Hudavi Wellness Facility in Long Beach – seeking a licensed esthetician with at least five years of relevant experience to rent a room
- Le Lux Beautique in Houston – seeking a licensed esthetician to rent one of three booths at negotiable rates
- Posh Hair Studio and Spa in Syracuse – seeking a licensed full-time booth rental esthetician to work in a relaxed atmosphere
- Salon Villages near Denver – seeking an esthetician to rent a spa room at a reasonable price
- Salons by JC of Highland Park near Chicago – seeking licensed estheticians to help fill 44 openings across the Chicago area
- Konprasong Salon and Spa near Atlanta – seeking experienced estheticians to work as booth renters at the spa in Suwanee
- European Skin Care in Columbus – looking to rent a room to a managing esthetician with an established base of clientele
- Episode Salon and Spa in San Francisco – seeking an esthetician to rent a spacious room at a well established location
- Salon One and Day Spa near Detroit – seeking an esthetician for room rental, offering a full line of Eminence skin care products from Hungary