Franchise Fee - What does this pay for?

Posted by Janon Otto on Wed, Mar 9, 2016 @ 10:03 AM


"What is the Franchise Fee?" This is perhaps one of the most common questions asked by a potential franchise buyer. And while this is certainly one of the considerations when researching a franchise system, it's definitely not the most important figure to look at. Why is this?

As the franchise fee is the initial fee charged by the franchisor, it allows a franchisee the rights to use the logo and systems, and start a business with those items. But, what you get for that fee with each franchisor does differ. The most important thing that you are paying for is the learning curve that the franchisor paid for with years of previous experience. This is what you need to find out about. For example, there are franchised companies out there with huge differences in the amount of experience they have in operating the concept that you are buying. There are also companies out there seeking out new businesses to franchise. These are usually companies that market franchises. They charge the franchisor the fees to do the legal and set up work to make them franchisable, and then also charge them to do the marketing. If the franchisor does not have many years of operating history, then they will still be learning as they are also franchising - this is can be a dangerous combination!

The learning curve is the MOST valuable asset that you aquire when investing in a small business franchise! At Shear Madness Haircuts for Kids, the operating history was 13 years before franchising. Most successful "new" franchises have suprisingly long operating histories. Five Guys Burgers and Fries may seem newer, however they have been in business since 1986, and began franchising in 2001! Starbucks began opening coffee shops in 1985, and Papa Murphy's Pizza opened in 1981 and started franchising in 1995!

As companies grow, they have successes and failures. This is normal. When you invest in a franchise most of the franchise fee is for the avoidance of those failures! Those failures may have cost the franchisor hundreds of thousands of dollars. This alone can make the franchise fee a real bargain!

Besides the operating history of the original concept, 0ther questions to ask about the franchise fee are:
  • How much training is included with this fee? Every system has different training, some may be at the franchisor's office, some may be online, and some may be at your place. A detailed outline of the training you should receive is included in the Franchise Disclosure Document in Item 11.
  • What items are provided? Do you get manuals? Most often you should get a Pre-Opening Manual and then also an Operations Manual. There may be other items that are neccesary to your business - which of those are provided and what must you pay for going forward?
  • What kind of access will there be to other franchisees or management?
  • What kind of ongoing support is offered with the system?
  • Will the system be improved as it grows?
  • What is the vision of the Franchisor?

Investing in a small business franchise system can be a great opportunity! Are you interested in learning how YOU can join the Shear Madness Haircuts for Kids family and run your own successful small business? We are one of the fastest growing kids hair salon franchise systems in the industry today! If you would like to learn more about small business marketing, great marketing strategies, resources for small businesses, how to grow a small business, or how to become a successful owner of your own kids hair salon franchise business, please click below or call 1-888-98 GONE MAD!

Item 7 Download

Topics: what is a franchise, Small Business Franchise Information, how to begin a business, how to franchise, what is a franchise fee

The Easy Way to write a Small Business Plan for a Bank Loan

Posted by Janon Otto on Fri, Feb 20, 2015 @ 10:02 AM

Writing a business plan for a small business can be a daunting task - just the sound of it makes it sound BIG! So here are some down-to-earth tips to make the process easy!

small business business plan

It's important to understand that when developing a plan, there are plans for internal use, those for investors, those for bankers, etc. Be sure you know who your plan is going to be for. In this article we are going to focus on the one written to obtain financing. 

If you are applying for a loan for a small franchise business, this process will be a bit easier as much of the information for three of your four sections the franchisor can help you with.  The bank will also know that you are applying for financing for a business that others have been successful in, and that you'll receive guidance and training for your business.  However, they will still want to know about you and why you personally would be a good fit for this business.

But remember, do NOT go for Length! Even though a plan that is pages and pages long may look impressive on the outside, to a banker with limited time it is NOT impressive!  They want to know "just the facts".  So keep your plan to around 10 pages.

They will evaluate you based on several criteria and those are what they want to know about.  As financing has become more and more difficult to obtain, selling yourself and your plan is required.

Section 1: This section is all about discussing the business that you want to start or get financing for. You may find it helpful to do a small SWAT analysis on your business (S-strengths, W-weaknesses, O-opportunities, T-threats of your business idea) - this will help you complete this section. You'll also want to be sure to properly answer the following questions:
  • What is the purpose of this business?
  • What problem does it solve?
  • What industry will it belong to and how much business does that industry capture?
  • Why are you different from what is out there?
  • What is your competition?
  • What research have you done that makes you believe that your business will succeed? (demographics, etc.)

Section 2: This section is all about you or your staff. In it, you'll discuss who the key people are that will be involved in your business. Be sure to sell yourself first (if you are going to be the main employee), then list the others involved and their relevant information.
  • Who are you and your people?
  • What relevant experience and education do they have that would make them competant and able to help you run this business?
  • What is their job responsibility in your business?

Section 3: Here is where you ask for the amount of money that you would like to receive. Make sure and ask for what you will need - including working capital.
  • What are your plans for the money?
  • Detail out what it will be spent for and how you determined what those amounts are.

Section 4: In this section describe how you intend to pay off the loan you are asking for.
  • Estimate your revenues and be sure to let them know how you came up with your figures.  With a Kids Salon Franchise you would estimate the number of haircuts per month, the price of those and the revenue from other services (with reasonable expecations to start slower and grow over time).  
  • Estimate your expenses as best as you can.  Here you should also let them know where you got your figures.  Make sure and group expenditures into easily understandible categories.  For example, talk about your Fixed and Variable Expenses. Fixed are those costs that will not change no matter how much business you do (rent, some salaries, equipment payments, phone, etc.). Variable expenses will change as your business changes (inventory costs, labor, possibly utilities).

If you have pictures or other items that would make this presentation more interesting, by all means add them - but do NOT overdo it!  Only add photos if they help educate the banker on what they will be loaning money for.  Do not just add pictures for fluff.

If you are beginning a small business franchise, then the franchisor can help you with items 2, 3 & 4. The information in the franchisors item 7 will assist you with section 3.  The information in the franchisors FDD item 19 can assist greatly with section 4.  If you are starting a business from scratch, a great resource to walk you through the business plan process is SCORE.

Maybe a franchise could help you in jump starting a new small business!  Download our free whitepaper to learn the four considerations when buying a franchise.

The Top 4 Considerations


Topics: franchise, kids salon franchise, salon franchise, kids salons, franchise opportunity, Shear Madness Haircuts for kids, the salon business, Small Business Franchise Information, how to begin a business, Free Resources for Businesses, small business how-tos

Career Change Advice: Buy a Business or Franchise?

Posted by Matthew S on Tue, Jan 13, 2015 @ 13:01 PM

careerchangeBuying any business or franchise can be an exciting and rewarding adventure, but success won’t come overnight! You’ll likely spend a great deal of time, energy and financial resources in order to help ensure the success of your business. And in a way, because you’re making such an important investment, you’ll find yourself putting a little bit of “you” into your business too. Therefore, it’s good to take a step back before starting the whole process and ask yourself the following: Does the franchise you are considering really fit with who you are as a person?

Following are several tips to keep in mind when investigating a franchise.

Personality – Does the franchise you are considering fit with your personality? Do you consider yourself an introvert or an extrovert? Do you enjoy leading, or would you rather be behind the scenes? Are you outgoing, funny, regimented, or reserved? Because there are so many different kinds of franchises that provide a large variety of services, you’ll want to look at areas that suit your personality.  For example, many people who choose Shear Madness Haircuts for Kids are generally a more outgoing personality type who enjoys the fun atmosphere our stores have. They also enjoy working with kids, and like the thought of being able to provide a service that seeks to bring a little more happiness into the world!

Lifestyle – Many people consider investing into a franchise system because of the unique challenges and opportunities that running your own business represents. But it’s important to remember that the kind of lifestyle you have (or appreciate) is an important factor in considering a franchise opportunity. Forcing yourself into a system that isn’t really “you”, can quickly lead to feeling burned out and unhappy.  For example, if you enjoy getting up early and going to bed early, certain types of franchise systems that are open late hours (or 24 hours) may not be ideal for you. Or maybe you don’t really like the thought of having to wear a suit everyday, or prefer more low-key environments over fast-paced high energy work spaces. All of these are important lifestyle preferences to take into consideration.

Skills – Think of looking for the right franchise as looking for the right job. If you have 10 years of experience working as a chef, it probably wouldn’t be a good idea to look for a job as an architect. You simply wouldn’t have the right skills to effectively do the job. Or, if you’re someone who really doesn’t have a lot of experience in managing people, a job that requires management of entry-level staff may not be a good fit. Similarly, when making a decision on a franchise, don’t be afraid to perform an honest look at what your skills are. You can do this through looking at your resume and seeing what you’ve demonstrated an excellence for over the course of your work history. Or you may additionally want to consider what you may enjoy doing in your free time as well. Either way, in order to help ensure success as a future franchise owner, be sure to focus on what your talents and abilities are!

Tools for Assessment - If you would like a little help in figuring out who you are and what really motivates you to get through each day, you might want to the following online resources. The Keirsey Personality Sorter is an online personality assessment that can be done for free at (more detailed reports are available for a fee). iPersonic Career Test also has an online personality test available at that may help you more clearly define your work values.

Exploring a Children's Salon Franchise

Topics: franchise, kids salon franchise, franchise buyers, buying a franchise, franchise opportunity, career change, how to begin a business, how to franchise, reinvent your career, Business Tips, Free Resources for Businesses, successful franchisees

Salon Franchise Owner Erin Nanke and Des Moines Marketing

Posted by Matthew S on Thu, Dec 11, 2014 @ 16:12 PM

Marketing in Des Moines

Developing a children's salon franchise into a thriving business requires a lot of time, hard work, and the use of effective marketing. Sometimes overlooked, marketing a business to your community not only can be a way to exercise creativity and have fun with your staff - but also helps generate a positive and exciting image to your audience! 

Erin Nanke, the owner of a successful Shear Madness Haircuts for Kids franchise location in West Des Moines, has used successful marketing campaigns to grow her business. Everything from using the famous Shear Madness pink Cadillac for parades, to passing out flyers and coupons at events around town, Erin's efforts have helped raise awareness on who Shear Madness Haircuts for Kids is - and how much fun it can be to come by for a visit! And through the use of marketing, the word is starting to spread. As an example, The Des Moines Parent noted recently that "Shear Madness is totally kid friendly and makes the whole haircut experience fun for the kiddos."

Erin has also been active in the Des Moines sports scene, and shared her initial idea and subsequent involvement in helping develop a Kid's Club for Iowa Energy (a minor league basketball team). After searching both Iowa Energy and Iowa Wild's (a minor league hockey team) websites last year, Erin discovered that neither team had a "Kid's Club". So Erin decided to contact them to put one together as a sponsor.

"I did both last year to give myself more exposure, being new to the market," Erin explains. "I pushed audio and video mentions at the game and they pushed having booths at the games. What I found last year is I couldn't staff the booths all the time and it was difficult to have interaction with parents and kids because they are there to watch games. We did free hair braiding, free color gel, I had a prize wheel they could spin to win free stuff. However, for this year, I decided I was only going to renew one of the two.  I went with Iowa Energy because they gave me most everything I asked for - which was more Kid's Club games (last year only 2, this year 4), video board mentions all games, PA announcements all games, and NO BOOTH, just signage, etc.  Also they had over 450 kids sign up last year, and Iowa Wild's was half that amount!" 

Erin also notes that her experience working for a local television station for 17 years in Des Moines before opening Shear Madness also helped develop important relationships, marketing opportunities, and negotiation skills. For instance, when Iowa Energy didn't quite meet Shear Madness expectations the prior year, Erin still chose to renew with them because she understood the errors weren't intentional, and that "they would go above and beyond to make it up to me this year. One example is the size of my logo on the t-shirts.  Last year it was the size of a half-dollar, this year it's the entire backside!" 

Meanwhile, after looking into what will deliver more of the results she's looking for, Erin has decided not to focus on having any booths at the Iowa Energy games - and just stick with audio and logo mentions. "For the four designated Kid's Club games I will have a fun interactive 'HAIR CAM' feature during one of the time outs where they put different hair graphics on the fans with my logo bugged throughout the feature.  Last year they wouldn't do it...this year they are for the same investment. And last year I passed out coupons. But this year, kids show their Kid's Club lanyard and they get $2 off a haircut through Mar '15."

"We are so proud of Erin and what she brings to our franchise system.  She is willing to share her ideas and help any store in our system come up with unique marketing strategies.  Erin runs an excellent business because she is not afraid of hard work and asks questions to make sure she is doing everything in the most successful manner." Shear Madness Franchising CEO Janon Otto said.

If you are interested in running a successful kids salon business - a Shear Madness Haircuts for Kids business might be just the match!  To find out more feel free to download our toolkit.  No obligation, just good information!

Exploring a Children's Salon Franchise

Topics: franchise, kids salon franchise, salon franchise, franchise buyers, franchise opportunity, the salon business, Small Business Franchise Information, how to begin a business, how to franchise, Business Tips, small business how-tos, growing a small business, marketing strategies

New! 20 FREE Resources for Businesses

Posted by Matthew S on Tue, Dec 2, 2014 @ 13:12 PM

20freeStarting your own business can be a serious and daunting task. With so many things to consider (and pay for) it's always a significant bonus to be able to find free resources that aren't just smoke and mirrors - but are truly helpful. Following is our list of 20 free resources for business that you might find beneficial as you work to grow your business. We hope they help you like they have us! (note: This post is an update to our popular "20 Free resources" post that we shared in January of 2012)

  • 1) helps design great Facebook pages that include contests, sweepstakes, videos and custom forms.

  • 2) Used by the White House, Time, and Fox, is a leading social media dashboard.  Use hootsuite to manage multiple social profiles, schedule messages and track brand mentions, etc.

  • 3) This site can help keep your business moving forward with little money spent.  You can hold meetings, sell tickets to your webinars, share your screen, record those important meetings, collect information and follow up.  All for free (which includes free support).

  • 4) For independent business owners, this is the fastest growing business network.  This site has a collection of amazing tools that are designed to get your business exposed.  “IBOToolbox is a ‘safe haven’ to build your business”  --Paul Williams, IBOToolbox Creator

  • 5) SME Toolkit helps you learn the basics of starting your own business with some thoughtful questions to ask yourself. For example: What do you want to do and how are you going to go about doing it?

  • 6) Free conference calls are simple and easy to use.  All you need is an email address and a name to receive an instant account.

  • 7) With your new business venture; you will want to protect your critical business data, financial records, photos and even music.  Mozy ensures your digital life will be there when you need it.

  • 8) You can focus on your business while Zoho takes care of the rest.  These apps will help you get more sales, get paid, support your customers and make your business more productive.

  • 9) Keep track of meetings and appointments in your personal or business life.
  • 10) Expensify: Expensify imports expenses and receipts straight from your credit card, submitting PDF expense reports by email and reimbursing up to $10K online! Completely digital expense tracking and reporting.  Free iPhone/iPad, Android, Blackberry and WebOS apps. Seamless QuickBooks integration.

  • 11) Generates leads, monitors competitors and safeguards your reputation.  The web’s leading solution for monitoring your professional interests online.  Track the entire web for your topics and receive new results by daily email. GigaAlert was formerly known as Google Alert.

  • 12) Vyew allows you to meet and share content in real time anytime.  Upload images, files, documents and videos into a room.  Users can access and contribute at any time.  Sign up is Free.

  • 13) Wrike: Free Project Management will rock your team’s productivity with a combo of task list, spreadsheets, Gantt charts and Activity Stream in 1 app.  Wrike brings all data in one place making project management fast, easy and enjoyable.

  • 14) Fresh Books Cloud Accounting: Fresh Books is the fastest way to track time, organize expenses and invoice your clients.

  • 15) CloudHQ: CloudHQ will replicate, sync and backup all Google Apps, files and emails with other cloud services such as Box, Dropbox for Business, Evernote for Business, SkyDrive, Basecamp, and more.

  • 16) Dropbox: Securely share, sync and collaborate with Dropbox. Dropbox is the secure file sharing and storage solution that employees love and IT admins trust. 

  • 17) This website lets you choose from 50 Free Apps to run your small business like a professional.

  • 18) Hubspot: Hubspot's all-in-one marketing software helps you optimize your website to get found by more prospects and convert more of them into leads and paying customers (free trial).

  • 19) Wordpress: Create a free website for your business.

  • 20) Gmail: With 15GB of free storage, you won't need to delete emails to save space!

The Top 4 Considerations  

Topics: Small Business Franchise Information, how to begin a business, Business Tips, Free Resources for Businesses, small business how-tos, growing a small business

Reinvented: The Modern Career Shifter!

Posted by Matthew S on Fri, Nov 21, 2014 @ 10:11 AM


The global recession that took place in 2008 caused many Americans to lose their jobs. Many people lost their homes, their careers, and their sense of security. "We were starting over in a competitive job market with people half our age and experience we didn't have," says a couple who lost the majority of their income in the construction business when the economy tilted on its side three years ago. Many small businesses folded under the same financial hardships, their owners returning to school or another fallback career. Many of these individuals took a long look at their situations and concluded they must RE-INVENT themselves.

Career Shifters: Whether or not you are an entrepreneur, when it comes to diversifying your income or perhaps shifting careers, there are some important decisions to make. What are my likes and dislikes? What are my strengths and my weaknesses? It can be very helpful to take a career/personality assesment test in these early stages to help determine what you might do best and best match your lifestyle goals with your career. We recommend the PRO-D from TAI, Inc. assesment test. This test will connect your motivations, talents, AND your personality with your best career matches. Many career shifters are looking for a lifestyle change as well. The ability to set your own hours and do something you love is actually what attracts many of these shifters into the world of franchising.

We find it interesting that studies show women make up the largest percentage of career shifters in the last four years (over 70%). Many women are starting up businesses or buying existing businesses and running them successfully in a fine balance with their own family and personal lives. It is suspected their social flexibility (often gained as mothers and as wives) allows them to reinvent themselves more readily in the professional arena.

Freedom to Choose: MOST mid-life career changers will choose entreprenuership or small business ownership to ensure financial freedom and a successful future for themselves and their families. It's a point when all acquired knowledge and professional skills come together in an orchestra of Passion, Performance, and Hard Work. The owner and founder of Shear Madness Haircuts for Kids, Paula Thurman was a fiery entreprenuer back in 1997 when she opened her first kid's salon. Her fantastic concepts and relentless work ethic is now reaping the benefits as Shear Madness grows rapidly across the United States. Paula says her only key to success has been “totally believing in the concept and never giving up.” But it doesn’t hurt that she passionately pursues new, innovative ways to bring clients in and help Shear Madness™ grow.

Career Shifters are Franchising

If considering a new career, buying an existing business, starting your own business, or buying a franchise, career shifters can expect a significant impact on their lifestyle and finances for the first year (at least!) Hopefully, initial investment does not outweigh the long term benefits of making the career change. Many career shifters are opting for Franchise Ownership because the professional groundwork has already been laid and a successful business model has emerged. When buying a franchise or mutiple franchises, shifters can choose exactly what type of business they wish to own and what their income will be. Some of the most popular franchise options (especially for women over 40) today include:

8 Suggestions for Career Shifters

1. Self Assessment - Conduct a thorough self anaylysis of strengths, desires, abilities and goals. There are lots of career assesment tools readily available online for a small fee, sometimes for FREE!

2. Research - Talk to others, read articles (like this one) and process the information with family and friends - research has proven itself most helpful for successful shifters in deciding the best career path for themselves.

3. Take Inventory of your Transferrable Skills

4. Get Training and/or Education - many career shifters begin by returning to school.


6. Gain Experience

7. Find a Career Mentor


For more information on Shear Madness Franchising opportunities please contact Jim Otto or download this excellent FREE resource on the Advantages and Disadvantages of Franchising and begin researching (possibly) your new career! To Download the Whitepaper CLICK Here!

We're having a great day at Shear Madness, we hope you have one too!

The Franchise Buyer's Toolkit

Topics: franchise, kids salon franchise, salon franchise, kids salons, franchise buyers, buying a franchise, franchise opportunity, Shear Madness Haircuts for kids, career change, how to begin a business, reinvent your career

10 Questions to ask before Looking at Franchises for Sale

Posted by Matthew S on Mon, Nov 10, 2014 @ 11:11 AM


If you’re thinking about joining the ranks of successful franchise ownership you might look before you leap! We at Shear Madness Franchising (franchisor of Shear Madness Haircuts for Kids) have put together a list of ten things that might help you decide if you’re ready to take that next step into this rewarding – yet challenging - opportunity.

1. Are you financially sound? Take a look at your financial resources, and make sure you’ll have enough to not only invest in starting up your business – but run it for 3 to 6 months.  And then consider that your income will be very small, but should grow slowly for the next 2 to 3 years while your business is becoming established.

2. Do you value business integrity? As a franchise owner, you’ll have a lot of eyes watching you. From your employees, to your customers and neighbors in the community, being a good example for others to follow will not only help you succeed in the long run – but also helps others succeed too.

3. Are you task oriented? Are you a task-oriented person who understands the benefit in following a set of guidelines dedicated to the successful operation of a franchise? After all, there’s a reason why your favorite Hamburger Franchise doesn’t sell taco food!

4. Are you a team player? Franchise owners are great team players that enjoy working with people. Running a franchise means not only fostering a great environment for your customers, but for your employees, other franchises within the franchise family, and even the folks who are working hard on your behalf at your franchise corporate headquarters!

5. Do you want to delight your customers? Delight customers with efficient services and promptly returned emails and phone calls. And don’ forget to smile, say “Thank You”, and let your customers and employees know how much you appreciate the work they do!

6. Are you resilient? Enthusiasm, optimism, and the ability to bounce back when a difficult business challenge presents itself are all key to being successful as a franchise owner. Apathy, a low incentive to succeed, or constant worry will hinder the growth of your business.

7. Do you have a marketing mindset? Franchise owners enjoy finding unique ways to promote their business in their communities. From taking part in parades, local sporting events, and much more – there’s many opportunities within your community to get the word out about what your business offers!

8. Do you love to learn? Are you someone who enjoys reading, listening to podcasts, attending seminars and talking with others about how to better run a business? 

9. Do you enjoy networking? The more you share and build each other up, the better! Franchise owners who work with other franchises and communicate what works and what doesn’t will have a competitive advantage over those who don’t!

10. Are you a person of focus? Don’t fall victim to being a jack-of-all trades, and a master of none. The risk here is that by spreading yourself to thin, you’ll limit how effective and productive you can be - which may result in poor products or services. Zero in on achieving perfection!

One thing to remember is that when an individual buys into a franchising opportunity with Shear Madness Haircuts for Kids, they won’t be going at it alone. Our team excels at being a partner who wants our franchise owners to succeed! If you’d like to learn more tips on how to achieve success from our team of business experts, click the below banner.

Exploring a Children's Salon Franchise

Topics: kids salon franchise, franchise buyers, buying a franchise, franchise opportunity, Shear Madness Haircuts for kids, how to begin a business, Business Tips, Free Resources for Businesses, successful franchisees, small business how-tos

Is a Salon Franchise for you? Six important questions to consider

Posted by Janon Otto on Mon, Nov 3, 2014 @ 12:11 PM

describe the imageOh - thinking of starting your own salon business?

You might want to think again before starting!  If you interview successful business owners you will find that owning your own business sometimes is NOT what it's cracked up to be!  It can be hard work!!!  Following are 6 traits that every business owner must have, or chances are he or she won’t have what it takes to stay until the paycheck finally comes in!

Personality type – Are you a competitor?  Most of us think we are, but are you?  When you ran races in grade school, what were you thinking as that other kids caught up to you?  That will tell you a lot about your competitive spirit.  Do you always believe that you have what it takes to win, no matter what?  Do you doubt yourself and your abilities?  In business you MUST believe. You cannot doubt your abilities.  You can second think and learn from mistakes, but that is wisdom and OK - it is not doubting your abilities.  No business owner does everything right the first time around!  And that is NO business owner!  There is always going to be a learning curve, and the learning will never stop.  There are many salons out there so competition is a given - can you take it? At Shear Madness Franchising we give you marketing tools to compete as well as a concept that is the BEST!

Numbers acumen – Can you evaluate numbers?  You may have an incredible business idea, but you may not open it in a place where it has the chance to succeed.  You must do the numbers – you need to evaluate all this BEFORE starting.  If you have already started and aren’t doing what you expected, it may be that your location or marketing are preventing your success.  Sit back and do the numbers.  How many customers does it take to make the income you need?  How many potential customers are in your market?  Are there competitors who will get some of those customers?  How many of the potential customers will actually do business with you?  How far will they drive, etc, etc.  Much of success or failure is all in the numbers!  If you aren’t good with these, find someone who is and ask yourself every question you can and try to estimate on the LOW side before you start.  A salon franchise system can help you with this!

Are you an Idea person or a Follower and implementer of others’ great ideas?  This is an important question to ask yourself.  You can be a great business owner with either trait, but the business you choose will change based on the trait that you have.  If you are an idea person – then owning your own business and starting it from scratch could allow your imagination to flourish!  If you are a great implementer of others’ ideas then you may be a perfect candidate for investing into a franchise system.  In a franchise system you can be the best implementer and most successful by doing well in an already proven successful system.  If you have great ideas, you could improve on an existing system as well.

Instruction Taker or Rebel?  This goes along with the question just asked.  However, it is a very important question to ask yourself.  Do you look at others’ ideas and think that you could do it better?  Or do you appreciate the wisdom of those who have been there before you and know it is best to do it their way?  Rebels are innovators and are great candidates for starting businesses from scratch.  Instruction takers make incredible franchise business owners. We love great ideas, but within the context of what we are already doing at Shear Madness - it's an opportunity for following a system with room for fantastic ideas!

Immune to discouragement – This is a biggy – if you are easily discouraged you will NOT succeed as any business owner.  Yes, there are times when it is wise to throw in the towel.  But there will be many more times that the going is just tough, and you'll need to stay the course with the knowledge that you will get through it and be successful!  If you are married, you MUST have the support of your spouse and family – sometimes they are the best cheerleaders and can help you through those tough times, because even those who are mostly immune to discouragement can have their down moments. 

Support System – This one is not necessarily a trait, but it is something that every business owner needs.  Encouragement, and surrounding yourself around those who are positive about your business is a must.  A franchise system can provide that "cheering" that you may need to get you over those bumps in your business.  Knowing what to expect on a monthly basis and how others' are doing can provide a basis to evaluate your own performance.

A salon franchise may or may not be for you.  But, to help you get more information we have put together a toolkit that can help you on your exploration journey.  Get it sent to your email here:

Exploring a Children's Salon Franchise

Topics: salon franchise, franchise buyers, buying a franchise, franchise opportunity, how to buy into a franchise, Small Business Franchise Information, how to begin a business, reinvent your career, Business Tips

Wise Working Capital Management Calculation and Planning

Posted by Jim Otto on Fri, Oct 10, 2014 @ 12:10 PM

Many business's have failed due to lack of sufficient working capital. So how much is enough and what formula do you use to figure it out? I would recommend using a bottom up approach, or put another way, what could go wrong that you may not have anticipated that could cause your new business to need more working capital then you thought.

Take franchises for example, the Item 7 in the Franchise Disclosure Document, referred to as the FDD, is the estimated cost to build out the franchise and typically includes working capital as a line item. In an effort to keep the cost of the franchise business low the working capital is sometimes understated. This can contribute to high failure rates of new businesses, as working capital is the life blood of a new business.


Many new businesses fail because of lack of marketing. Getting your name out in the community, building a loyal customer base and differentiating yourself from the competition can take a new business on average 3 to 5 years. Therefore whatever you anticipate spending on marketing you can pretty much double that amount. The busier your location becomes the less you can spend on marketing. But getting that initial foot traffic can be costly. 

In the initial stages of your business you must market to the masses. Once you have a client base you can save money by target marketing to your existing customers - or to new customers only.  You will have gathered customer information (i.e. email addresses, etc.) that will allow your to touch your client base more economically.


Obviously if your goal is to provide a superior customer experience and customer service your location needs to be properly staffed. Ideally your payroll should be less then 35% of your overall revenue but that may not be possible in a new location. Expect your percentage of payroll to be higher initially in a new location until you have the proper benchmarks in place to track your traffic. Most franchised businesses can give you these benchmarks based on the historical data of previous locations within there systems.

If you are appointment based and even if you aren't you will need to get the feel for your traffic flow and staff accordingly.  In the beginning the worst thing you can do is to be understaffed when those customers come through your door!  So overstaffing is really a must spend in the beginning!


It doesn't do much good to bring in new customers if you don't have the product that they need. Replenishing your inventory is a key monthly expense that you need plan for. In our Chldren's salons anywhere between 15 and 40% of our monthly revenues can come from retail products. A good business owner will plan in advance and anticipate the demand based on what time of the year it is, as an example most all businesses sell more product during the holidays but that inventory will need to be purchased in early fall to have it delivered in time to be marked and displayed.

Analyzing your business, it's sales trends, customer traffic and other historical patterns are vital to figuring out how to use your working capital wisely. It's all in the numbers.


There are very few businesses that have steady income throughout the year!  A Construction company focusing on cement and asphalt will be slow in the winter but busy in the spring and summer.  Retail businesses are busy during the fall and back to school.  When are you opening your business?  If you are not opening until the busy season than your premarketing expenditure needs to be extra large as you will want to get your name out there when customers are thinking about your type of business.  If you are opening during a slower time of the year than you will need operating expenses to keep open with the income is not going to be there - but this is still advantageous as you will have a chance to practice good business operations before you get the busy season rush!

If you have a very seasonal business you will want to look into a business line of credit for working capital requirements during those slow times.  This will probably be a yearly need as keeping good employees happy and the doors open during slow times is important!


Imagine your business day from the time you walk in and turn on the lights and security system to the time that you leave for the evening. Lights = utilities, Bathroom = Cleaning Supplies, Taking a Charge Card = equipment, merchant service fees, Printer = ink & paper (Office Supplies), Insurance, etc.


Every new business is going to have some expenses that were not planned for!  What will those be?

  • The Landlord gets the new tax rates and suddenly yours goes up and you have to make up the shortfall.  This frequently happens in newer shopping areas.
  • Do you have a used AC Unit - what if it goes out?
  • Unexpected Lease Requirements - when are you getting the reimbursement for your Build Out Costs?  What requirements must be met before those funds are released?  Is there anything that could delay this?
  • The contractor did not include essentials in the bid for work and both parties overlooked this.  Plan for at least a 10 - 15% overrun.

Padding the Working Capital Expected will prepare you for any of these instances and more.  AND if none occur then you are still in business with dollars to spare!

Shear Madness Franchising franchises Shear Madness Haircuts for Kids salons.  We have worked with franchise stores and have seen the unexpected happen!  When it does we help by identifying and helping with unfair situations for franchisees.  Presenting options that help prevent these events as well.  Most franchise owners have not opened businesses before.  Having someone who can advise them and help prevent working capital misuse is one of the significant advantages of franchise ownership.

If you are thinking of opening your own business exploring franchises could help you make better decisions in this process.  We have put together a toolkit that explains how you might go about exploring franchise ownership, what you can learn, and how it all works.  Just click below to get this tool!

Exploring a Children's Salon Franchise

Topics: franchise buyers, how to begin a business, Business Tips, small business how-tos, working capital

Opening a Salon Franchise

Posted by Janon Otto on Tue, Jun 5, 2012 @ 16:06 PM

christopherSalon Ownership - choices, choices, choices!

There are many different ways to run a salon.  Choosing between them takes a lot of self evaluation.  Are you a stylist?  Do you want to be in the salon all the time?  Are you considering handling the management or turning that over to someone else? Here are the basic types of salon types to choose between:
  • Low-end, High-end and those in-between the ends. The high-end salons offer all services and sometimes even include the offering of massages. They may also offer chemicals for permanents, hair removal, etc. The hair removal field is a growing field and makes this option more and more viable. The issues with high-end salons that only deal with hair is that most individuals end up becoming loyal to their stylist more than to the salon itself. If the stylist leaves, then the client tends to leave as well. Adding services that are not so stylist specific can make this easier to manage.
  • Low-end salons tend to be more easily recognizable if they are part of a franchise. These customers recognize and know what to expect. Typically they are run by stylists who are paid hourly. These stylist double as the salon management and do not typically develop a clientele since appointments are not made and walking-in is the mode of operation.
  • Another option is a salon that is made up of stylist who are all independent contractors. They develop their own clientele and rent space from the salon owner.
  • A mid-range salon may be run by a manager, take appointments and may pay the stylists an hourly wage, a commission or some combination of the two.  This is where Shear Madness Haircuts for Kids fits in.
  • In addition to deciding between these types of salons, you'll also want to think about the clientele that you'd be most interested in serving. Would it be women, men, children or families?

The above list is just a small sampling of the decisions that need to be correctly made to be a successful salon owner. However, with a salon franchise, all the difficult decisions in regards to the handling of employee pay, systems, clientele management and more are all laid out for you.  A franchise is like having a built in business coach telling you exactly the best way to do things! Want to know more? Check out our free download at the link below!
Exploring a Children's Salon Franchise

Topics: franchise, kids salon franchise, salon franchise, kids salons, franchise opportunity, Shear Madness Haircuts for kids, the salon business, how to begin a business