04 Mar Retail Property Sub-leasing Business Plan
Galerie de Beaute may best be described as a center for professional beauty services. Galerie de Beaute leases fully-equipped units to state-licensed beauticians.
Traditional salon owners face many difficulties when opening a new business. Finding a space in a high-traffic area that rents well is difficult. Although 40% of beauty professionals own their own business, 60% are employed in a privately-owned shop.
Employees in traditional salons are paid 50% commission. This means that employees often have to pay for the supplies and products they use. These issues can cause high turnover in the industry. Because of these challenges, salon owners have resorted to booth rental in those states in which it is legal. Booth rentals are appealing to many but they have some disadvantages. A signed lease must be signed in order to be considered a booth tenant and not an employee. A signed lease is required for booth renters. If a audit is done and no signed lease is found, it could result in significant liability including interest and penalties.
A long-term loan or an additional investment will be sought to supplement owner investment. Galerie de Beaute can use this loan to finance the necessary improvements on the leasehold. Leasehold improvements include equipment, plumbing, electrical and carpentry that are required for the construction of 24 suites.
The first year profit was $17,000, rising to $37.500 by year three.
- Establish Ourstate's first salon mall
- Offer high-quality suites
- Maintain long-term financial stability
- A range of beauty and professional-care services are available to you
- Keep professional ethics at the highest possible levels
- A progressive environment attracts talented entrepreneurs
- Respect community commitments
- Galerie de Beaute offers an alternative to salon owners who are salon professionals.
- Galerie de Beaute provides a chance for nail technicians, hair stylists and massage therapists to run a mini salon with minimal start-up capital.
1.3 Keys to Success
- Galerie de Beaute is located on the heavily travelled corridor of routes 13 and 40. Average daily traffic exceeds 20,000 vehicles.
- Galerie de Beaute appeals to salon professionals as they are required to pay a set monthly cost. Salon professionals do not have to work for commission.
- Galerie de Beaute offers salon professionals the chance to rent fully-equipped units. Rent includes lock, utilities, and insurance. Each salon professional can set their own hours, price, schedule appointments, purchase supplies, and set up pricing.
- Many challenges face owners of traditional salons when they start a new company. It is not always easy to purchase equipment or find a location with low rent in high traffic areas. 40% of all beauty professionals own their business. 60% work in private shops.
- Workers in traditional salons are paid 50% commission. Employees are also often charged for supplies and the products they use. This results in high turnover. Because of these challenges, salon owners have resorted to booth rental in those states in which it is legal.
- While booth rentals can be very attractive, there are some drawbacks. To be considered a booth tenant and not an employee by both the IRS and the State, you will need to sign a lease. An audit that finds no signed lease could lead to significant liability, including penalties, interest, and back taxes.
- Salon malls have been established in several other states (i.e. Maryland, Virginia and Ohio have salon malls. Ourstate, and those immediately adjacent do not, as yet, have any salon malls.