Barbershop Business - Booth Rent vs Commission Barbershop

Are you planning on opening a new barbershop? Or are you considering switching your business model inside of your barbershop? If so, this video is for you!
This video is NOT another barber tutorial video about how to give taper fades, burst fades, mohawk fades, or how to record any haircuts. This is more about changing the barbershop culture. That it IS POSSIBLE to be a 6 figure barber and it all starts with having the right strategy in place!
This video is for any barber or hairstylist who wants to learn how to leverage the power of social media and digital advertising to grow their brand, get more customers, and reach more people.
If you like what you see please like and subscribe to this channel! My name is Mike D. Joseph and I run a digital advertising agency called VisualMedia Marketing, the #1 Ad Agency for Barbershops & Hair Salons.
I'm not a barber, nor have I ever owned a shop. However, I've consulted with 300+ different barbers and shop owners in the past year and I have been able to recognize patterns that make shops successful and what destines them for failure. I'm on a mission to change the industry and educate more barbers with what I've learned and practiced in the industry.
This video is more for the barber who is taking the time off to research whether or not they want to open up their own shop and aren't sure which business model to follow for their shop.
Or if you're already a shop owner and are taking this time to re-evaluate your business model and are considering making a switch in the next few months.
In this video, I cover the income potential for a barbershop that follows the booth rental business model, a model in which the shop owner charges a barber to rent a chair versus a commission business model, a model in which the shop owner receives a % of revenue generated by the barber.
There are pros and cons for each, and it all depends on your individual goals and business goals.
Barbershops that follow the Booth Rental model charge a fee to barbers to rent a space in the shop. They are considered contractors and in most cases are not contractually bound to the barbershop. Meaning booth rental barbers will sometimes have their own logos, their own prices, and services. Some even work on their own schedule, regardless of what the ‘business hours’ are for the barbershop.
In most cases, the business owner of a booth rental model does not market the barbershop, in other words, the owner is very much like a landlord renting space. In a booth rental model, it is usually up to the individual barbers to market themselves and grow their clientele. It is very hard to scale this model because it relies heavily on the number of barbers that you contract to, instead of the number of customers walking into the shop.
This model works for business owners that are also barbers and are servicing clients in the shop. Since they can rely on their current client base, as well as receiving checks from the other barbers in the shop. This model can be very lucrative and passive for the business owner if their own calendar is booked, and depending on how many chairs available they have in the shop.
Barbershops charge anywhere from as low as $150/week or as high as $300/week to rent a chair, it varies based on the market.
Whereas barbershops that follow the commission model charge a percentage of the revenue generated by the barbers. In most commission model barbershops, barbers are more like employees and are expected to follow a consistent schedule. The barbershop owners are more likely to invest in marketing their barbers because the business will see a return on that investment. For every client that walks through the door the business as a whole takes a percentage. Whereas in a booth rental model, it doesn’t.
Barbershops charge a commission rate as low as 70/30 to as high as 40/60, it varies based on the market. For example, in a commissioned shop, for a 70/30 model, the business will take 30% of revenue generated by the barber. Some even offer incentives, where the rate will go down based on how many more customers that barber can service.
In a commission barbershop, the business lives by the number of customers walking through the door. In a booth rental barbershop, the business lives by the number of barbers in the shop.
All of this information I’ve shared with you has come from my years of experience marketing and advertising in the barbershop industry.
If there is anyone you'd like me to have on in the future, or if you want me to cover anything specific on my next video, join our private group / barbershangout
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[@lf9341]

This was great.

[@mariojenkins5620]

Love your videos bro, question tho, I'm opening up a 3 chair shop in michigan, and I had someone approach me about wanting to invest... what should I do when I know nothing about investing... thank you g

[@VisualMediaMkt]

thanks Mario! Whenever you are approached by an investor, think beyond the monetary value. Ask yourself, how will this person help the business grow, is this an investor who will be involved on the day to day of the business or is this someone who is just trying to build their portfolio? Is this investor going to help finance other locations as well, how long of a business relationship will this be?
To be honest, if you are a barber and you plan on working at this 3 chair shop, in a booth rental model most revenue the business will make is around $10k/mo if you're not behind the chair cutting then it's going to be around $3k/mo.
If you have a commission model the business will more likely to cap out around 27k/mo, which is around 10k after percentage. With you behind the chair you're more likely to make 12-15k/mo after percentage depending on your clientele.
Then you have to decide how much you're okay with splitting with that investor. (and I didn't even factor expenses in those numbers)
I think the first thing you need to ask yourself really is, do you 'need' an investor, and whether or not they're coming in as a business partner and will help finance future locations. Weigh the pros and cons, and go from there.
- Mike

[@NeisiKay]

In a commission shop, are the barbers W2 employees or 1099?

[@lf9341]

W2

[@Ritecut100]

The booth rental model doesn’t work, every shop I know that do booth rental always is short. While commission u as the owner controls the growth of the barbers and shop. Now there is a difference between commission cash pay and payroll shop. The way things are going the booth rental model will start going away. A lot of this has to do with taxes. Commission shops are more successful in more public locations like shopping centers.

[@VisualMediaMkt]

You are 100% right all successful. Barber shops we worked with are a commission base shop.

[@terrybradford7668]

I have a booth rental Barbershop but I want to turn it into a commission barber shop nd step by step instructions any Recommendations

[@lf9341]

A lot more headaches. You have to worry about stealing etc, health insurance, taxes...