"I think a lot of salons miss the boat on commissions. That's why we lose good stylists sometimes -- we are not fair with them," he says. "I want to keep people with me as long as possible, and I think I can if I'm not greedy." At John Carl's, a stylist whose work brings in up to $300 a week gets a 50% cut. From $301 to $500, commissions rise to 55%. They top out at 65%.
Not that his stylists are getting rich. His steadiest performer, Karen Scholar, makes about $250 in a good week. The others earn less, with the exception of 20-year veteran Fern Edwards, who was part of the exodus from Stop 'n' Style. Her strong following, however, doesn't help cash flow much. She rents her station for $75 a week and gets to keep what she makes.
Tramel hadn't wanted any rental stations. "I think salons should be commissioned, because as the owner it's the only way to keep control," he says. "With rentals, everybody needs a key, and stylists make their own hours. As a commissioned salon, you have employees as opposed to having people who just work there." But he broke his rule for Edwards, a trusted friend whom he values for her camaraderie and lively shop-room banter.
Tramel's commissions are high, but his prices are low. A haircut, with a shampoo and blow-dry, costs $9. A cut with a perm is $39, and a tint, $25. By comparison, at Robbie Olson's Hair-Em salon, in another town outside St. Louis, a haircut with a shampoo and blow-dry is $30, a cut with a perm costs $60, and a tint, $35. That averages $17 more per procedure. Tramel knows he is inexpensive. He sees that as a competitive edge as he builds the clientele. But he acknowledges that soon he'll have to boost his rates.
* * *
By last August John Carl's had about 700 regular customers -- 400 of them were Tramel's -- and was adding about 15 new ones each month, mostly by word of mouth. But attracting more business remains the highest hurdle to the company's success.
"I've got to get the whole salon to where it's like my station, to where it's constantly busy the whole year," says Tramel. His days are so packed that he can't squeeze in all his old customers anymore. Some of his stylists, meanwhile, are idle. Only Scholar is busy 40 hours a week. "I try to get my older clients to use some of the other stylists," Tramel says. "I try to find a personality fit. But not too many are interested."
His location, which he still likes, is not likely to bring relief. Situated on the minimall's rear face, the salon can't be seen from the road. And there's not the kind of walk-in traffic a large shopping center would generate. Those are significant barriers to growth.
"We give location a weight factor of around 70%," says Michael Cole, president of Salon Development Corp. and one of the industry's leading consultants. "It means that if you're in a bad location, you'll have to work your butt off to succeed. I've seen salons in high-traffic locations, and the owner had trouble walking and chewing gum at the same time but did relatively well in spite of it."
Linda's marketing campaign, such as it is, has yielded less than dramatic results. At $60 a month, a display ad in the yellow pages was out of the question. Ads in a local newspaper proved ineffective. And her placement of the company logo on shopping baskets in an Arnold discount mart hasn't unleashed any stampedes.
Her best move so far has been participating in The St. Louis Post Dispatch's welcome package for new arrivals. It includes a coupon good for a free haircut if the client also gets a perm. "That's the only thing that has brought in more than one person," she says. "The way we run the business all the time is trial and error, and that goes for our advertising. We're not sure what will bring people in."
But asked to name his biggest challenge, Tramel doesn't hesitate: personnel management. "That's been the hardest thing for me to learn," he admits. "I never want to hurt anybody's feelings. I'm not a crazy, off-the-wall, yelling type of person. I try to keep it undertoned. But you still find people who want to take advantage of you."
Linda is more direct: "It came as a surprise to John and me that not everyone has the strong work ethic we have." Even so, her attitude toward the business is almost perfunctory. She'll work hard to make it succeed, but if it fails, she won't be devastated. "We try to expect the worst, so if it happens, we won't be heartbroken," she says. "It's our livelihood, but it's not our life."
As for Tramel, he knows he could make more money someplace else; that's always an option. Still, he's glad he is taking his shot. "If we didn't try this," he says, "we'd always look back and ask ourselves why we didn't when we had a chance."
EXECUTIVE SUMMARY
THE COMPANY
John Carl's Hair Designs Inc., Arnold, Mo.
Concept: Operate a first-class hair salon in a growing, middle-class community south of St. Louis, capitalizing on the founder's strong personal following
Projections: Gross revenues of about $100,000 in 1991. Slow but steady growth thereafter
Hurdles: Building the customer base; increasing sales of retail products; maintaining a stable work force; motivating employees
THE FOUNDER
John Carl Tramel
Age: 36
Family: Married, one son
Personal funds invested: $0
Equity held: 100%
Salary: $19,400
Workweek: 40 to 50 hours
Education: High school; The National Academy of Beauty Arts
Other companies started: None
Last job held: Hairdresser
FINANCIALS
John Carl's Hair Designs Inc. -- First-Year Operating Statement
Six Months Ending 12/31/90 6/30/91 Total
