There are many surprising ways to make one million dollars.

Moving To the Big City- Million Dollar Hairdressers

Million dollar hairdressers – It has not been easy and they had to start over, but the path is getting clearer. John and Amber Klassen, now in their early 30’s, decided to follow Amber’s passion and support it with John’s business savvy. After graduating from cosmetology school, Amber opened a salon in La Crosse, KS (pop. 1,324) and ran it for a little over 5 years. It was very small and never made much money. While Amber was doing this, John was pursuing a business management career. After John was transferred to Salina, KS, (50,000 people), he and Amber discussed their future.  They were just not on track to save much money and felt like they would always be just making it. Everyone loved Amber and she knew how to keep her clients happy. John thought that by bringing a business approach to a hair salon they could really make a future for themselves. So John took his promotion, travelled back and forth to Salina, studied cosmetology at night, and started making his business plan and scoping out a location in Salina.

Main Salon

Little Help from the SBDC-Million Dollar Hairdressers

They heard about the SBDC while getting ready for their new business. They both took several classes offered by the SBDC to start and grow your business. They also helped with the loan application, the business plan, and providing demographic information. The SBDC help them get their SBA guaranteed loan for $100,000, and their down payment was $11,000 from their mother. That put them in business. John resigned, Amber closed shop, and they moved to Salina and opened their new salon, the Thiessen-Elise Salon in 2009. Since they knew no one in Salina, marketing would be critical.

Marketing-Million Dollar Hairdressers

Location

The marketing started with their location in the historic Salina downtown. They used the    uniqueness of the location to create a classic, sophisticated New York style look. Amber stated that, we wanted the customers to have a real historic feel when they walked in.”

Community Involvement

-They have hosted the Pink Pumpkin Painting Party to raise awareness for breast cancer and donated the proceeds.

-They host the annual Thiessen-Elise Salon’s Fashion/Runway Show.

-They are also active in many smaller community events.

Hairdryer Area

Good software for Internet Presence

–DemandForce software-John feels 90% of their new business comes from their online presence. He says they use DemandForce software that integrates their social media and acts as a client reminder to keep bringing clients back. Because of the software and their presence in social media they have a great feedback system where they get great reviews. They have over 200 reviews that are all pretty much very positive, so if anyone searches for a salon, their name comes up with overwhelming positive reviews.

Annual Revenue and Profit-Million Dollar Hairdressers

Their business started off very good with steady growth from 2009 until 2012 when their landlord kicked them out of their lease.  As you can imagine, this was very disruptive to their business.  They were closed for more than 6 months while searching for a new location and regrouping.  It was a big setback to their business causing them to lose momentum as well as income.  When they reopened in 2013 they had to bring their customers back, but since they had stayed in touch with their clients, getting back up to speed seemed to go pretty quickly.  They are back on track again.  Since they both work in the salon, their salaries are included in the net profits as shown in the following table.

Gross Revenue               Net Profit before taxes                         Estimated Business Value

2013   $150,000        $75,000 * Reopened less than a year

2014   $315,000       $126,000 *extrapolated through August         $150,000-$250,000

2015   $500,000       $200,000 * Projected                                      $250,000-$400,000

2016   $750,000       $300,000 * Projected                                      $450,000-$600,000

2017 $1,000,000       $400,000 * Projected                                     $600,000-$800,000

Shampooing Area

Getting to $1,000,000 Keep Growing the Business

Expansion

-There are two other older and more established hair salons in Salina, both have over $1,000,000 in annual revenues. They do feel they will need to expand their location and this is in the planning phase right now. Of course you cannot just add their expected profit, they will have living expenses and other business expenses, but they will be earning enough money to be legitimate millionaires in 2-3 years, especially if you consider the value of their business.

Business value

There are many variables, but for a hair salon 1.5 to 2 times their net revenue before taxes would be reasonable. There are other ways to value hair salons, but this is a good rule of thumb. They have probably added value with their excellent social media presence to include having so many good reviews on line.

Another Location

This is a possibility. It could get them to $1,000,000 substantially quicker. They are currently evaluating if a second location in Salina would be better or if they should open another salon in a nearby city of about the same size.

Coffee Lounge Area

The Lessons-Million Dollar Hairdressers

-Prepare Yourself Financially-Keep your job and cut your expenses. Get yourself ready for your transition into your new business.

-Advice-Get all the advice and assistance that you can. John and Amber used the SBDC. Their counselor helped them with their business plan and with their SBA guaranteed loan.

-Educate Yourself-Prepare yourself by taking any classes you need to educate yourself to be in business, like the SBDC courses for QuickBooks, marketing and anything else available that might help you. Also John took the cosmetology courses to be knowledgeable about the business and get his certification.

-Marketing-You must be aggressive and smart in your marketing. Don’t assume a market will be there, do your research. John and Amber checked the demographics as well as the local completion and set up their strategy based in a large part of being the overwhelming favorite with positive comments on all the social media platforms aided with the DemandForce software and the best service possible so they would get good reviews.

Summary-Million Dollar Hairdressers

You may not be a hairdresser or ever want to be, but here is another example of a tried and true business can get someone to $1,000,000 in the bank. John had to eventually quit his job and they had to move, but they put themselves on the right path