Considering my options

[Joods]

Okay...I can't continue to work out of my house for a few reasons: 

1. My house isn't licensed. Technically, it's not legal to do this from my house, as per the State of PA and their beautiful regulations, but as long as the neighbors don't care... I'm not too particularly worried. 

So, you're at the point where you have to either rent a station in someone else's salon, or own a salon.  Gotcha.  Just trying to wrap my head around what options you're considering, lol.  

LOL... I get it... and I want you to ask me these kinds of questions because you could absolutely touch on something I might miss. And I don't want to miss anything. 

So... I explained that I can't rent a chair. I'd have to be an employee. I've already tried that in a chain salon and I did not like how they structured their commission and hourly pay for a brand new employee. It wasn't right that they hold someone without a following, to the same SPH (Services Per Hour) as a seasoned stylist with a following. There was no way for me to ever get any commission based off of that and I was frustrated by it. 

2. There isn't enough business coming or going from my house for any suspicions to be raised. And I don't want there to be any. I have friends over on the rare occasion of about one every other month or two. 

You have expectations that your volume of business will increase, then?  Even though the market is saturated?  Do you think that a loan officer would share your confidence?  How many customers would you need to serve to cover your costs?  

I do have that expectation that my business will increase and grow. As people come to know me by my work and how well I perform it, then yes... I will grow, as will my employees. People find a stylist they like after spending a lot of the time dissatisfied with ones who just can't seem to get that cut just right. And when they find someone who can, they will always look for them no matter where they go. In this day and age, many clients are connected to their stylists on facebook and twitter so that if a stylist leaves one location, they can tweet or send a post out to their clients letting them know where they went to. One of my former educators worked in a salon during the day and taught at night. She said her clients will often travel up to two hours to find out where she went to because she's that damn good. She always had a client in her chair. 

I honestly don't know what a loan officer would think, but I'm planning on doing some market research in this area and including that in my business proposal. As far as customers needed to cover costs: Well there are a lot of variables to consider for that question such as what type(s) of services will the clients be getting and how often? How much electric and water will I be using each month - that's going to affect how much my utility costs will be. How many different types of products do I intend to keep on my backbar? 

Clearly if all I offer is mens hair cuts at $20 a piece, then it would be much easier to do the math. Moreso if I knew how much my utility bills were going to cost each month. The former business that occupied that space was a furniture consignment shop. Obviously they didn't have the water or electric use that I will have. I could probably triple their bills and still not even come close to what I may be spending a month on water, electricty and gas. There's also internet and cable to consider as well. Gotta be online now a days to stay in business. I will have a website where clients can book appointments and order products so if they run out of shampoo or conditioner, they can alert me and I can set it aside for when they come in to buy it. They can also be notified of monthly specials via email, facebook and twitter. All of this is part of advertising, which has to be in my business proposal as well. I have to think about how I'm going to advertise my business and who I'd like to reach. 

3. I could lose my license because I am not carrying malpractice or liability insurance. The few friends I do hair for don't make it worth my while to carry insurance like that. All someone has to do is call the state board and file a complaint because something happened and I could be investigated. I don't need that in my life. 

Understandable.

I don't know what the worst thing that could happen if I defaulted on a business loan. I'm not really thinking of failing. I'm thinking of succeeding. 

I'd strongly caution against that, and suggest that you spend time coming up witha  worst case scenario.   It's useful to have these even if you aren't seeking financing...as it can give you an idea as to where you're heading for month by month.  We all have hopes and dreams, but most small businesses fail within the first few years (and by most, I mean a soul crushing majority).

I wouldn't even know how to do that, but if you have suggestions or advice on how to prepare for that, I'm open to listening to you. I want to succeed, not fail but you are right... gotta prepare for anything to happen. 

Five years is a realistic expectation for any retail business for ROI, but I am in the service industry. Not only will I have new clientelle, but I will have repeat clientelle as well. There's residual income from that. Plus I will have a nice selection of product line to purchase as well. 

How much of your revenue do you expect (or would you need to expect) to secure in product sales?  

Product sales will probably only account for 10-15% of my revenue as the primary focus is on services. When I worked at (that horrible chain salon) I was selling approximately $500-600 worth of retail each week because of how I did it. I will always educate my clients first before selling them something I don't think they need. They in turn will buy what I do suggest, no matter the cost. 

I don't want to do the franchise thing. There are too many cookie-cutter type salons out there to begin with and they don't offer a full line of services that I intend to offer.

 Gotcha.

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You only need as many chairs as you have employees...though, right?  Maybe a few extra for expansion or any process that somebody has to sit and wait for and an employee can use the time to serve another customer...but.....there has to be some solid number that you base this on?

So, some amount of space x is required per chair, x amount of chairs required per employee, x number of prospective employees, equals total required space (not counting common areas/office,facilities). 

Right?  I can't see how else you'd quantify whether or not a building was too big or too small to service your 2-300k loan over 2 years.  Too big, and it's wasted capital outlay (which, importantly, would be better used covering for loss or shortfalls), too small, and it won't be enough to pay down the principle.

Yes... I could very well put more chairs in my shop and it would actually be very beneficial for an employee if she was processing color on someone's head, to actually take a hair cut in the mean time. I have actually thought about this. There will be a color bar in the back of the shop for chemical services. No color will be applied at the stylist stations. All of that will be done back on the linoleum flooring in case color gets dropped on the floor. There will be special stain-resistant tiles down just for that purpose. While the client is sitting there letting her color process, the stylist is free to sit a hair cut in her chair. 

I'm not sure how to explain the second part of your other question (what I bolded). Hair care services don't work in the way of solid numbers because not all hair care costs are the same. A $20 hair cut utilizes a stylists own personal pair of shears and/or clippers and will use a dime-sized amount of shampoo and conditioner back at the shampoo bowl. So as far as product usage on a hair cut goes - my cost will be minimal. As for a stylists shears and clippers -  I don't provide those to her. She must come with them, as is expected. Her shears are not my cost to bear. Compare that $20 hair cut to a $150 color job. My cost comes in the form of gloves, caps (if tinting and using this method), foils, color, developer, shampoo, conditioner and lightener (if needed). Those items are NOT reusable. They are considered consumable products and must be replaced on a regular basis. The color bowls, tint brushes, towels, stylist aprons, capes, gowns (recommended so the client doesn't get color on their shirt) - are all things my shop will need and can be reused, but will always need to be replaced over time. 

Also keep in mind that there will be other things going on in my shop. Nail care - manicures and pedicures will be happening. Skin care - waxing and facials. Costs for all those vary as there are consumable and reusable items as well.