Intro: Do you feel like you were meant to have a kick-ass career as a hair stylist? Like you got into this industry to make big things happen?
Maybe you’re struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you aren’t seeing any results. Maybe you’ve already had some amazing success but are craving more. Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer.
Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you’re ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists.
I’m Britt Seva, social media and marketing strategist just for hair stylists, and this is the Thriving Stylist Podcast.
Britt Seva: What is up and welcome back to the Thriving Stylist Podcast. I’m your host, Britt Seva, and today, we are talking about the pros and cons of salon partnerships.
I will start at the very top of this episode and say that I actually feel like I am fairly experienced in this topic, and so I want to share my personal experience with partnerships. Whether I advise for them or against them, I am going to give a personal opinion on this one.
Sometimes I’m like, “Stay open-minded, look at all the options.” This time I’m going to give a personal opinion because I have a pretty strong one, and then I’m going to get into the pros, the cons, how to set one up properly, all the things.
I’m going to start by saying that when I worked at a salon, which I am a licensed cosmetologist in the state of California, have been since 2007. I worked in a salon from 2008 to 2016, so about eight years or exactly eight years. For a portion of that time, my salon was owned by two gentlemen who were business partners. And I say “for a portion of that time,” because I got to watch their partnership dissolve in real time and I’ll share the backstory of how that partnership came together.
I’ll be very transparent, I wasn’t there when the partnership came together. However, I’ve heard the story many times. It’s always been accounted the same way, so I think I can speak to that. I’ll talk about what it was like when the times were good, what it was like when the times were bad.
The reason this partnership came together is the salon that I worked at initially was owned by one gentleman. He opened the salon, I want to say in the early 1990s, and he built a really great salon, hired a great salon team. It was booth rental at the time, and hired this other gentleman who worked with him as an apprentice.
In California, California is one of the states where somebody can be completely unlicensed, choose to work with a mentor stylist who is licensed to have an apprentice here in the state, and that apprentice works for that stylist for a period of about two years. It’s going to vary state to state. California is in the middle of unwinding lots of things, but at that time it was about two years.
At the time, the apprentice stylist was working under the owner of this salon and this apprentice stylist was fire, just had it, was extremely talented. Clients really loved him. He built a clientele very, very quickly and around the time that this new apprentice stylist had become completely licensed and was really building a solid clientele for himself, the original owner of the salon was at a place where he was thinking about the future. The original owner of the salon was, I’m going to guess somewhere between 10 and 15 years older than this apprentice stylist. He was starting to think, “What am I going to do with this salon in the future? I probably don’t want to sell it. I would like to bring on this other stylist who’s incredibly talented, is making a ton of money. I’m going to bring him on as my business partner.”
They created a formal legal partnership, which you a hundred percent should do if you’re going into a partnership. We’ll talk about that in a moment. Created a full business partnership and not too much later, the original owner stepped away from doing hair completely. That’s critical and I’m going to come back to that later in this podcast.
But the essential working dynamic of the partnership for the bulk majority of the partnership was that this formerly mentee stylist, like the apprentice, continued to do clients full time, was the lead stylist on the floor, so would host the majority of the education and was the go-to if any of the stylists had issues.
Technically, this former assistant associate apprentice was now the go-to for the stylists, the head honcho on the floor, and the original owner was very much backend management. So business management, payroll, hiring, firing, stocking for the salon supplies, all the backend stuff the original owner was doing and the new owner was still on the floor.
That worked great for a time and I don’t know the complete ins and outs of how they did it financially, but I know the nuts and bolts. The nuts and bolts were that the income that the stylist who was still behind the chair was bringing in was not for that stylist to keep on his own at all and never was. He had to be very okay with the fact that the arrangements of this partnership were going to be that whatever he generated behind the chair was essentially going to go into the overall salon pool as the baseline foundation to keep the salon open and running.
This was not a small salon. We had anywhere from 18 to 26, 27 stylists at any given time, so the overhead was high as you can imagine. We would have five or six assistants at any given time, three or four receptionists at any given time. It was a big salon and whatever he made, he did not get to keep. At the end of each pay period, they each got a salary and during the quarters where there was extra money left over from whatever the stylist who was still behind the chair made or whatever the stylist who was not part of the ownership team were making, they both split. That was essentially the arrangement.
When the original stylist who was the original owner decided that he wanted to open a beauty school, that’s when they invited me to become the salon director, so I essentially replaced him.
Now, both of these two gentlemen went on to co-own that beauty school. I went on to lead the salon team day-to-day. The owner who was behind the chair continued doing clients for the entire time I knew him. He scaled the schedule back a little bit because they also had this academy that they were running as well. But that was the working dynamic for a really long time until it wasn’t and it fell apart.
I don’t know the full details of why it fell apart, but my perception is that the mentor stylist, the one who came in as the apprentice, decided it just wasn’t what he wanted to do any longer. Being a salon owner is not for the faint of heart. He was at a place in his career where he was seasoned at this point. He had been licensed for 20 plus years. He had done a lot of hair and I honestly think it just wasn’t what he wanted to do or be anymore. He was still teaching classes very aggressively, handling a lot of stylist issues, having to take on all of his clients. It’s a lot of financial pressure and responsibility, and I think he was getting to a place in space where it wasn’t for him anymore.
Unfortunately, it was what the salon really, really needed. He and the original owner were starting to have friction and tension over the way that they thought things should go and more differences of opinions than commonalities and things just changed and started to fall apart.
So it was in the best interest of the salon company as a whole for the partnership to dissolve.
Then what happened was that original assistant stylist stayed on as a stylist in the salon, but now it was weird because he used to be the boss and he used to be the owner, but now he’s just one of the many. It continued to be pretty funky and it never fully resolved. I ultimately ended up leaving that salon. It wasn’t a place where I wanted to continue working anymore. My coaching business was flourishing and thriving and it felt really good, and the salon partnership dissolving was starting to feel not so great.
I’ve shared the story before where I was offered the opportunity to buy into a salon. That was my opportunity. When that assistant associate owner decided to step away, I was given the opportunity to come in and the terms simply didn’t work for me. It wasn’t what I was looking for. I declined and chose to go this direction instead and I have no regrets. But I’ve definitely been on all sides of that situation and I’ve seen partnerships go well and I’ve seen partnerships go poorly.
In the business I’m in now, I’ve considered partnership twice. One time somebody approached me asking if I would consider them being a partner. Another time I approached somebody else because I thought it might potentially be a good fit. Both times I was the one who ultimately walked away and I have no regrets about that.
The reason I walked away both times is because partnerships fall apart more often than they stay together. The most successful businesses today generally do have some level of partnership, whether it’s well-known or not. A lot of the most well-known businesses today are not 100% owned by any given person.
For example, in my business, I’m the 100% owner. I have no shareholders, nobody else has a vested stake or interest, it’s just me. When you look at bigger, more successful companies, that is fairly rare. There’s a lot of companies out there who don’t publicly share that they’ve brought in one, two, three, four partners and they’re no longer doing it on their own.
I’m very aware of that, that for a lot of companies who grow and scale, they do bring on partnership. I’m also very aware of the Forbes statistic that says 70% or more of all business partnerships fail. I understand that.
When you choose to go into partnership, there’s the opportunity for massive success beyond your wildest dreams or epic failure where you lose it all. It is a very risky and heavy decision.
I’ve been getting a lot of DMs in the last few months. It’s not like I’m getting ’em constantly, but in the last few months I’ve gotten a good slew of people saying, “I’m in a partnership and things are getting rocky,” or “I’m considering a partnership. What do you think?”
I thought this was a good crossroads to unpack what it looks like to be in a partnership, the pros, cons, and things that you should think about.
I believe that there’s three reasons why you would choose to have a business partner. Like I said, to this point, I’ve only run this business by myself, but a lot of people start business and they’re like, “You know what? I really want to have a partner in this.”
I think there’s three reasons why. One is going to be financial support. Running a business is expensive, and when you bring in a partner, it’s a shared financial burden. There’s a few different ways to do that. You can bring in an angel investor or somebody who just chooses to financially assist without having any sort of visionary or business management skin in the game.
A lot of people will say, “I’m willing to angel invest in your business. I’m going to give you $50,000 to start this thing up, but in exchange, I want 20% ownership and 20% of profits forever,” or whatever the terms may be.
However, they’re basically going to be a silent partner. They like your business plan, they like your vision, they believe in you. “Here’s the money for the startup. I expect to be made good on this on the backend,” right?
Now, a lot of times those investments don’t pay out and a lot of times they pay out in hundreds of thousands of dollars.
That’s one way to do it. Another way to get financial support is from a family member. There’s a lot of people where it’s like my mom or my dad or my aunt or my uncle or somebody, my grandparent, whatever, gave me the money to start up my business. Great.
Financial support is one of the reasons you’d have a partner and that partner could either be visionary involved in the day-to-day or silent.
The next reason why somebody would choose a partner is fear. This is one of the worst reasons to choose a partner and also one of the most common.
Have you ever considered bringing in a business partner and you’re like, “I’m thinking about bringing in my friend, Julie. We get along so well. I think she’s super smart and we’d be great together.” That’s probably one of the worst reasons to have a business partner. But we do that because we think to ourselves, “Well, doing anything alone is scary, so if I have somebody by my side, I’ll have a comrade to go through this with and we won’t be in it alone. At least we’ll be suffering and struggling together,” which is even as I explained it, you can see that’s one of the most irrational reasons to start a partnership. But it’s also one of the most common.
Maybe you’re at a salon right now, and you and another stylist that you love or another two stylists that you love are all very unhappy and you’re tossing around the idea, “Maybe the three of us leave this joint and we head off together and we open our own spot.”
That to me is a misery-loves-company partnership, like “We’re all extremely unhappy here. None of us have ever opened a salon before. It seems less scary if we all go into it together because at least we’ll all be together figuring it out. There’s nobody left behind. I’m not alone.”
But it’s a very emotional decision, also a very common one. The challenge with that is usually when you make a fear-based partnership, both parties are not experienced enough, and so you’re hoping that somehow when you bring more inexperienced people together, it makes up for what you lack, but it doesn’t.
The third reason why somebody would choose a partner is to me the only smart reason and it’s because you found somebody who does make up for the areas in which you lack. Like I said, I reached out to somebody in this existing business looking for partnership because they did make up for the areas that I lacked. I walked away because the terms weren’t right for me, but I knew that it could potentially be viable because they did something that I do not do, and I would never consider a partnership with somebody who does what I do. That’s a recipe for disaster.
But when it’s somebody who does something that I do not do, do not understand, they’re better at, they’re doing something I’m not interested in, that starts to become very smart. To me, generally speaking, bringing in a partner who makes up for an area you lack is the only good reason to consider it.
Here’s the partnerships to avoid, in my humble opinion: any partnership with more than two people. I know that’s a tough one because I know in our industry specifically, there’s many, many a salon model where it’s like three partners is good, five shareholders is great, bring on an additional person, the more the merrier. Then, before you know it, you have a board of directors and seven different votes and five different opinions, and good luck getting a group of even three owners all on the same page.
Does anybody listening to this have siblings? Do you remember growing up when you and your two siblings would be at each other’s necks because you all wanted something different for dinner or you’d fight over something that was irrelevant? Throw money into that equation. That’s what it’s like when you have a business partnership with more than one person.
Anybody listening to this podcast been in a relationship where you share any kind of finances? You pay rent together. It could even be a roommate. It doesn’t have to be romantic. How hard is it when you have any kind of relationship with anybody where money is on the line? “You owe me rent money and you haven’t paid it today.” Now you’re pissed.
Maybe it’s somebody you share a bank account with and they spent $400 that you weren’t expecting. Now you’re pissed.
Well, in our personal life, we give more grace or we’re willing to work through those challenges because generally speaking, we care about the person that we live with or we care about the person that we’re married to or whatever.
When it’s a business partnership, you’ve got all that money on the line, but the love isn’t there to float the down times. And so because of that, it becomes a massive, massive pain point.
Number two partnership to avoid: any partnership based on financial need. “We can open a business if we put all of our money in it together and we do it together.” I think that’s very shaky. If you’re going to bring on an investor, I totally understand. What I think is best is like I talked about at the beginning where one partner—ideally you—is the visionary and the money person is simply the money person. They’re like, “Listen, I don’t know how to run a salon. I don’t know anything about this, but I believe in you. I believe in your vision. I’m happy to put in a cash injection so long as on the flip side, these are the returns that I’m getting. We’re good.” Then they just trust you to run the day-to-day. That can be good.
That being said, it can be really dangerous as well because if somebody gives you even let’s say $10,000 and you’re not able to pay them back for years and years and years, that is going to put a massive strain on your personal relationship potentially.
If this is somebody you’re not personally involved in and it was just about the money, it could actually get uglier because they could end up wishing that they had gotten their return and taking you to court if you didn’t set yourself up properly. There’s all these things to take into consideration, but it’s risky.
Number three, the partnership based on this is going to be so much fun. Partnership is hard. Anybody like me? I got married when I was 23 years old and I remember my husband and I, bless both of our hearts, we were so young and naive and we thought marriage was just going to be like we were so great dating as boyfriend and girlfriend. We’re like, “Oh my gosh, it’s just double down on that. That’s going to be amazing.” I’m so fortunate because over 20 years later we’re still together very happily, but I can’t say it’s been the easiest thing.
Being in a partnership is very difficult. I think about the young, naive 23-year-old me, 22-year-old me when I got engaged thinking like, “This is going to be so fun.” Yeah, it was fun. But also the remaining 16 years that came after that, I had to work my ass off in that marriage.
It’s the same thing in a business partnership. Yeah, it’s fun, but you also are going to have to work very, very hard.
So if a business partnership is just based on the idea of let’s do this together, it’s going to be so fun. That’s essentially an instant fail. It’s not going to be fun. It’s going to be very hard and you want to partner somebody with somebody who’s going to be in it with you for the long haul.
The best partnerships are going to be separate but equal. Both people are going to be dedicated to education and learning, and you’re going to have a shared vision, period.
If you’re considering partnership with anybody, step one for me is sitting down—and this is going to take several conversations—you both listing out your vision for the business. And I don’t mean what color you’re going to paint the walls. I’m not talking about the branding, I’m talking about the vision. How long are we going to have this thing for? What does hiring look like? Who’s going to do the training? Who’s going to take out the trash? Who’s going to fire people if we run out of money? Who’s going to take the line of credit out on their house? If we both need to go into debt, what’s that going to look like? If one of us wants to leave, how’s that going to go?
Make it as ugly as possible. Think about all the worst case scenarios and how you’re going to choose to navigate them. When I say “nail down the vision,” that is what I’m talking about. Good, bad, and ugly before you even consider it.
When I say separate but equal, here would be a good partnership.
When I talked about my salon owners when the partnership was good, it was when one of them was doing all the hair, the other one was doing all the business management. The one who was doing all the hair never felt a type of way, at least he didn’t talk about it publicly, never felt a type of way about the fact that all the money he made behind the chair, not one penny of that went directly to him. He was not resentful about it. He felt fine about it. Every single thing he produced behind the chair was going into the shared pot because his business partner was running everything business-management-wise on the backend.
I had never heard him say, “He’s taking advantage of me because all he does is sit at a desk all day and I’m taking clients.” Never once did I hear those words come out of his mouth. I think that’s very important is for you to see each other as separate but equal players in this business and realize we need to be equals in this thing if this is going to work out.
Then allow each of each other to own their own zones. If the owner who was still doing hair, wanted to do something, the business-minded owner wasn’t like, “I don’t know about teaching that haircut.” He was out. It wasn’t his place to say. If the owner who was still doing hair was concerned about the extra 5% spent on marketing, he could give his two cents, but at the end of the day, the one who was business-minded, that was his zone to own and based on the partnership, the trust had to be there.
Really think about who’s going to be separate but equal. What zones are you each going to own? What responsibilities are you going to take on and how are you going to split that?
Lastly, that dedication to education and learning. I cannot tell you how many partners have come to me in the DMs and said, “I’m so irritated. My partner’s lost their passion.” So unfortunate. It’s the very first step in a partnership falling apart. You both have to choose year after year to be committed to education and learning. It’s almost like in a marriage, being committed to year after year, being in couples therapy. Except for that, it’s more important. There’s lots of couples who are not in couples therapy year-round, and I totally understand that. In business, it’s almost a non-negotiable. You both have to choose to have an active interest in learning and education. You both have to have an active interest in being coached. As soon as either of you gives up on that, it’s over.
Okay, so staying active in that is important. Let’s get into pros and cons.
When you look at the pros of salon ownership, we start with less financial responsibility upfront because you’re going to be sharing it with somebody else. Shared responsibility. When you choose the right partner, you get somebody who makes up for the areas where you lack and it’s somebody to fully confide in, and I get that part. Having somebody who could be on the ride with you can be important, but you can find that other places than in a business partnership as well.
Cons, you also share the profits, and I think that people forget that part. It’s so easy to be sharing the cost. It’s like, yeah, but you also share the riches. Are you okay with that? Are you okay with not arguing about that piece?
And you have a really good financial mindset with this partner you’re taking on where you’re not going to fight about the money because money is the number one thing that people fight about. You need to be 100% certain you guys are on the same page with that.
And two, you either have to agree or agree to disagree on everything. In a partnership, you either have to be fully aligned with each other or be okay compromising and be okay.
Conceding for me, one of the number one reasons I don’t have a partner is because I like to be the decision maker. I don’t want to compromise. I’m not interested in doing that. I feel like I know what I’m doing. I feel like I have a good sense of what works, and I’m not super interested in anybody else’s opinion at this point, if I can be totally honest. I would not be a great business partner because I’m too bullheaded in that sense.
You have to ask yourself, am I somebody who likes to compromise? Do I want somebody else’s opinion? Am I okay not having my way? That’s a really good question to ask yourself.
If you are going to go the partnership route, let’s talk about what that would look like.
First things first, create a legal structure with disproportionate ownership, meaning somebody should own 49 and somebody should own 51. This is controversial advice, but I think with a 50/50 partnership, you set yourself up to lose because let’s say you deadlock in some major decision. How are you going to come to terms on that? What is the plan?
If you have a disproportionate partnership—t’s like 40/60. Well, at the end of the day, somebody with the 60% share is going to win because they have more stake in the game.
This is where in our industry we struggle because our industry loves to be emotional, loves to be friends with their business partners. “I care about Susie so much, she’s so amazing.” This is business. If you don’t want to make hard business decisions, start a book club. It’s much easier. It’s much more friendly. There’s no money on the line. Everybody gets to be lovely. That’s so great.
If you want to have a business partnership, it’s going to be ugly sometimes, and so having a legal structure with disproportionate ownership really, really helps. Instead of being separate but equal, be separate but unequal when it comes to the finances.
Number two, work with the financial advisor to figure out the money before you start the partnership. If somebody’s a 60% owner and somebody’s a 40, should you both make the same salary or not? Don’t just say, “Well, I own more. I should make more.”
Talk to a financial advisor. Look at what really makes sense for you. Decide how you should pay yourselves, how you should pay your team, how you should pay your taxes.
Are you set up legally correctly? Talk to somebody first before you even get wheels in motion starting this thing.
Number three, create job descriptions that are separate and aligned with the ownership percentage. If one of the owners, like in my ownership, one was behind the chair and one was running the business management side of things, I don’t believe they did, but ideally, they should have had full job descriptions for each other and they could have held themselves accountable to that, right?
I’ve seen some partnerships where both of the salon owners are both behind the chair and one does marketing and web development and social media, that side of things. And the other does more of the team management, payroll, picking up salon supplies. Great. Write job descriptions for that.
With that being said, can the marketing person say, “Well, I don’t take out the trash. That’s salon management,” or do you believe that’s a shared responsibility? Figure that out before you start so that there’s no problems down the line over it.
Four, this one’s so important and I see so few people doing this: create and sustain weekly leadership meetings. I will say the co-owners and I had a meeting every single week and it was critical and we were talking every single day, but every single week sitting down and saying, “Okay, what is it we’re going to talk about? What’s going on? Who are we having challenges with? What are the things we’re considering? Tell me about the retail lines.”
Having that every single—and we didn’t skip, I don’t think, once without excuse every single week we met. That is important.
If you’re in a partnership every single week and you don’t sit around and say, how was your weekend? What did you do? You sit down and talk about business every single week. If there’s nothing to talk about in the business, talk about the education you just picked up because remember, being education-focused is one of my requirements for partnership. There should always be something to talk about.
Number five, create a master binder of logins, access codes, and SOPs. It is shocking to me how often I coach a couple of salon partners and one partner’s like, “Well, I don’t know how to get into the bank accounts.” Are you kidding me? You are a partner in this business and you can’t even access the bank accounts? What happens if your business partner’s in a terrible accident and they’re in the hospital and they haven’t passed and you can’t take on ownership of the business? We’re just going to freeze the bank accounts? What is your plan for that?
When somebody is like, “Well, I don’t handle web development, so I don’t have the password for that.” Again, what are we going to do if something happens to your partner? We’re just going to throw the website in the trash can. Let the URL go. What is your plan?
You should have access to everything, even if you’re not regularly accessing it. A master binder with details, the legal paperwork, maybe keep this in a safe, y’all. All of the passcodes, access to everything, contact names and information. A master binder is critical.
Number six, hire a coach or a support person. I touched on this. I think it is more important in a business partnership than in anything else to have a business coach, somebody supporting you regularly, mentoring you, because guess what? Problems are going to happen. Having somebody that can help you troubleshoot them before they fester is critical.
It doesn’t even have to be a one-to-one coach. It has to be somebody that you can align on, who can guide you along the way.
Lastly, plan for an exit. One of my favorite sayings is we have too many pilots in the air right now who never planned for the landing. So many of us in business took off, sped up on the runway, took off into the sky, are cruising at 30,000 feet, but never figured out what is the end game in this business. If one of the partners wants to leave, how does that go?
Does there have to be a buyout? What is that buyout going to be? Who’s going to decide the value of the buyout? Can they bring in another partner of their choosing or does the partner who’s staying have to choose that? Or does the partnership dissolve completely?
All of these things are things that you need to decide before you enter in. What does the end look like? It is incredibly rare—I can’t give you one example of a business where both partners stay in it for the same amount of time, and both partners walk away at the exact same time. That’s got to be less than 10% of partnerships. That is so exceptionally rare. At some point, you’re going to choose to go separate ways. Decide what that’s going to look like now so that when it comes up, it’s not a surprise.
Whoa, this was a long one. I know we dove into partnerships in a really huge way. I hope this is beneficial. If you have any questions, leave me a rating or review. Share this on Instagram if you have anything you want to share with the world.
As I always like to say, so much love, happy business building, and I’ll see you on the next one.
