NerdWallet's Smart Money Podcast - Nerdy Business: Building a Brick-and-Mortar Business

Episode Date: July 28, 2022

Opening a brick-and-mortar business isn’t for the faint of heart. This episode, Sean and small-business Nerd Rosalie Murphy interview Uyen Le. Le owns Beauty Bar, a full-service beauty salon with two locations in Colorado Springs. Le walks us through the ups and downs of securing financing to open her first location, getting a liquor license, hiring and growing her employees and weathering the COVID-19 pandemic.  To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Welcome to the NerdWallet Smart Money Podcast, where we typically answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Sean Piles. And I'm Rosalie Murphy, a NerdWallet writer who focuses on small business. Today, we are bringing you the next installment in our Nerdy Business series, in which we interview entrepreneurs about starting and growing their businesses. Rosalie, who are we talking with today? Today, we are joined by Gwen Lee. Gwen is the owner of Beauty Bar Inc., which is a full-service salon, bar, and boutique with two locations in Colorado Springs, Colorado. Gwen grew up working in her mom's nail salon and took over the business when she was pretty young, and then she launched her own concept in downtown Colorado

Springs. Very cool. Well, Gwen, welcome to Smart Money. Hi, thank you for inviting me here today. I'm so excited to be on Smart Money. We are so excited to talk with you, and I think it would be interesting to start with hearing about your background in the beauty industry. Can you tell us your experience? My family are immigrant to America. I came when I was six, got my citizenship when I was 11. My mom of told my mom I would never work in a salon because that wasn't going to be for me. My first day of college, I also knew I wasn't going to make it in college. And so I had to tell my dad that. And I just remember him saying, you know, then you need to be prepared to work for the rest of your life. And so I said, you know what, I can. I think I can.

And that's what I've been doing ever since, chasing that dream. Okay, interesting. And can you describe Beauty Bar, the business that you own today? So we are a creative blend of full salon services. We do hair, skin, and nails, but we also have a full bar, which we create amazing, beautifully crafted cocktails. And then we also have a full bar, which we create amazing, beautifully crafted cocktails. And then we also have a boutique inside the salon. Huh. Sounds like a fun place to hang out for a few hours, have a drink and get your nails done and chat. Yes.

It's a one-stop shop kind of deal because our first location is downtown. So we get a lot of business people, especially business women. So, you know, the joke has always been like, you can do five meeting in one, um, one meeting. And so they all see each other there. And so they, they start talking about stuff that is coming up or stuff that, oh yeah, I was going to tell you something perfect. You're here, you know? So it's fun. Very cool. What went into getting that business up and running? What was going on behind the scenes while you were working to launch Beauty Bar? So honestly, because working for my family, I never felt like I needed to own my own business because my mom always treated me like I was one of

the owner. But then I met my partner, Chris Morrison, who is a real estate agent. He's from Colorado Spring. He loves Colorado Spring. And he said, you know, why don't we just buy this building? You know, 2011 around there, you know, it was still really good in the real estate market. And for us, our downtown is super small and quaint. And I'm like, yeah, we can do this. I have a little bit of experience in, you know, big city living, big city life. So I said, yeah, why don't we do that? So not only were we going to be, you know, our own landlord, you know, the people that owns the building, but now we are also opening a business. So it was a lot. We had a lot going on. So, you

know, my mom and my aunt was able to lend us some money, but then my business banker suggested that we try to apply for this SBA loan. And that's what we did. So our SBA loan was to help us with the construction of the building. And then the other side of that was now like the capital to run the business. What's interesting about Beauty Bar is that you're a hybrid of a couple different types of businesses at once. You have a bar and you also have a salon at the same time. Was that difficult to start up? Did you feel like you had to set up two different businesses distinctly or was it all kind of bleeding together?

So in a way we were both new to everything, you know, and downtown you have zoning. So when you're the landlord, you have to worry about the zoning. So then you have to put in a zoning permit to see if you were able to even open that type of business. And so learning that part zoning, even your sign, you need a permit on that. So it was really hard and was really rewarding at the same time. So I learned really fast and I started talking to people. And, you know, if you said you were owner of something, I just start asking. And then that's how I learn. I don't think that there's any stupid questions.

Yeah. What was the process like getting your liquor license? Hard, hard. Because usually liquor has to go, they go hand in hand with, with food. And so we don't have that food concept. We have a service. So we want to provide a service and then you can get a drink. So that was really hard going to the liquor board. Number one, it costs a lot of money to get a liquor license. And then when you go to the liquor hearing board,

you have like six older, you know, businessmen. So there's no woman on the board that understand what a full service salon is. And I have to keep reminding people that I am number one, first and foremost, a full service salon. I am not a bar. And so I have to keep telling them like, you know, it's probably going to be like 25% of the income is the bar. And if that, you know, because if you're averaging one drink a person, or some people might get two, that's not a lot, you know, and some people don't get any at all. And so that was the thing that I had to like sell myself and now have to tell, okay, you know, this is just an additive. So if it was so difficult, I got to ask, why did you keep pushing for it? What about having a bar in there was so important to you?

You know, I always believe that if you keep putting something out there, then it's going to come. And so I was already talking about it. I was talking about, we're going to have a bar where I was talking about it to my client. I was talking about it to anyone that I knew. So there was no way I wasn't going to have a bar. And it was hard. We opened without the liquor license. And when we did open with a liquor license, we could only drink at the bar. So then we went to the state. And so one of the board member actually came down and toured the salon so that he could understand. And then so that's how we got our liquor license. What does your business look like today? How much of your revenue does come from the bar? And how much comes from hair and nails and skincare and all the other things? Honestly, our liquor business has gone up quite a bit. It almost come up every year now

that people realize that we have it and how cool it is. So not only that, we started kind of like blending our service. So like if let's say you go in to get a hair blowout, you know, if you want your hair to be the kind of like, you know, messy looking bedhead, you can do like an extra dirty martini with it. So we kind of like blend it in a little bit. So it's pretty cool. And now that we have a name and people know, it's gotten easier with the bar. And it's actually really fun. The bartenders are fun. They're they don't know anything about hair. And every time we hire them, they're like, you sure I'm going to make money doing bartending? And we're able to grow people too in that aspect. Our front desk become our bartender, our bartender become our front desk. Yeah. You have two locations now. How many employees is that in total? And it's a really

challenging environment right now to hire and retain workers. How are you dealing with that? Before COVID, the last year was 2019. We were always sitting on between 70 and 80 employees between the two salons. After COVID, now, you know, this is our first full year really being back without any restriction. We're sitting about like 65 through 68, but the service dollar has grown. So I guess in a sense, it's a good thing, you know, and then also, the people that wants to work, they're really, really working, because now they're making a lot more money than they would before, you know, and it's more opportunity. And, and our job is hard, because when we hire them, like fresh out of school, we spent so much time training. Sometimes they work under our

master stylist for like a year, just training, just learning how to cut hair, do nails or any of that. The time that is put into that is a lot for the outcome that we get. So we try to build like that employee retention really high. Yeah. I know in the beauty industry, oftentimes, you know, I think my hairstylist just sort of rents a booth at her salon. How does that work in your salons? So the salon business, we always have a bad reputation for high turnover. And we really do because how do you grow somebody and be able to still profit at the same time? And everyone says employee costs a lot of money. For an employer, it does cost us a lot of money. You know, especially hairstylists and nail technicians, they don't look at us like we're very smart or make a lot of money.

But I can tell you, I have people that make six figures in my company doing hair and nails. But on top of that, our business concept is hard and different because it costs the owner more money. So we're a W-2 commission based salon. So we don't do any booth renting or any of that. Everybody that's in this salon is a employee. We also offer health care for anyone that qualify for that. So you have to work with us for 90 days first. And then we also do bonus structure based on your sales dollar and also vacation pay. And vacation pay is based on your retail sale. And how we maintain our customer and build that is we invest a lot. You know, I have master stylists that oversees their department. And we have leads that sit with every single one of our girls and show them their numbers and how they need to grow. You have to maintain your clientele. First, they're the beauty of our client. And then how do you turn them into your client? And that's a skill because people are not raised with customer service. It's all about customer service. I think

we're the only job that really is like six inches away from the client. And we are constantly touching them throughout that whole service. So how much closer are you? So if you don't have that customer service, I always say, oh, she can't cut her hair straight for anything. But man, people love her because they come to see her. Building that relationship is really important. Exactly. That's what I teach all the young girls. I said, you don't know who's in your chair. You don't know who you're talking to. You mentioned COVID a little bit ago, and I'd love to hear how that changed the way you think about and run your business.

So my jokes is, and everyone that works for me knows, I felt like in the last two years, I probably opened four different type of salon over and over. And we did it very well when we got shut down. So we got shut down in Colorado for six weeks. So because they're W2 employees, they were able to get on unemployment right away. So it was really nice. You know, that was one load off of me when I know that my girl was not contracting and that they were able to call unemployment and get on it right away. That was so, so, so nice. That's the benefit of being a W2 employees. So, and then we were able to open. So our first came back was we only had 10 people. So we had five employees and five customers in the whole salon.

What would you normally have? I don't know, 40 people. Oh my goodness. Sometimes 50 people. So we're not like the quiet, romantic type of salon. We're like, you know, loud talking, you know, hey, can I have another glass of wine type, you know? So it's really, the energy is really good in there when we're super busy.

So going back to that, you know, we have to, number one, clear everything out. Then we, I just reach out to all the girls. I said, who wants to come back to work? And who doesn't want to come up back to work? I'll take whoever first. I can only do five at a salon. We could probably do 10 if we double shift. So we normally open from nine to seven. So we actually open from seven to eight, so that we can double shift. So then that went away. And then now they open it up to now you can have as much people if you can in the salon, but they at

all time has to be six feet apart. And so then, you know, then now we could bring more people in, but the skin department couldn't come back yet. So then we turn all of our esthetician room and lash room into now personal suites. So literally like three business right there. Wow. Yeah. Sounds like a lot to manage. And a lot of people choose to stay closed and they were able to do that. But I knew that if I stayed closed, I would probably never go back because it would just be harder. I think when the hard time comes and you just deal with it back to back to back to back, I think you can do it. But when you have a longer break, like let's say I was to close six months and then reopen until six months, I don't think I would have had the energy to do it.

What about some of the other impacts of COVID? I mean, there have been supply chain issues. We've seen really dramatic inflation over the last couple of quarters. How has all of that stuff impacting your business? I know that I'm the face of Beauty Bar and people think that it's just me, that I'm the superpower woman, but I'm not. I have a really, really amazing team, you know? And so working through this and being able to like, Hey, you guys, can you do this for me? Hey, can you do this for me? So when we go and get supplies, we have to drive here, drive there. Or when it was like backup, you know, it was hard. Sorry, I'm just getting emotional. I don't know why. We just learned to now buy stuff in big bulk.

My mom garage became our storage, my sister garage, my garage. And we were able to just buy stuff in like bulk and pallet. It wasn't like now it wasn't like COVID that was going to stop us. But now it was a supply chain. If we don't have the supply, how could we do it? You know, you're talking about hair color. We need that. It's not like the company shut down. It wasn't getting here. But I knew I knew just because just from buying the stuff that we needed to buy for COVID, which was gloves and masks, and it was how expensive it gone up and how they didn't have any. I just knew that I just have to stock up. And, you know, I'm super grateful for the business that I'm in besides from the bar, you know, the stuff that we buy, they don't go bad. So if we have to sit on it, it was going to get used. Yeah. What do you think the future holds for you and your team and

Beauty Bar? A lot. I'm excited. It got me to be thinking a lot of things now because not only do I have a great team, but also I have a lot of loyalty and I could feel that and I could see that and I'm super grateful. You know, in any business that you have, I think when your employee get to the top of your company, there's no more room to grow, but to be their own boss, right? You know, I always want to make more money. Why wouldn't they want to make more money? So I think there's always a cap in our company. And so with all this, it's opened my eyes to a lot of things that I can do, you know, like the shortage on supply. It got us thinking, okay, maybe Beauty Bar needs to be a supplier.

You know, should we open a supply shop that when our girls want to leave us and want to own their own booth rental or run their own salon that maybe they can buy from us because they know us because there's a relationship there. Yeah. And it's the products they've already been using. Exactly. So they know exactly. And all they have to do is just now buy it from us. So that is something that we've been thinking. And then with me just getting older, my clients are getting older. My very top notch stylist that's been with me for a long time are also getting older. So we are very actively looking into opening up a med spa

because now we need them extra machine to help us look a little bit younger. It makes a lot of sense to evolve as your clientele are as well. Yeah. Yes. I have a lot of clientele that's been with me since I moved to Colorado Spring, which is 18 years ago, you know, and they seen for me from when I was young to now, and they want to be with me. And they're starting to ask me question in the beauty industry, when I really want to get this done for my bag under my eyes. And I'm thinking about this, what can I do? And so I'm starting to see that, you know, so I don't offer it right now. So they have to go somewhere else. But if I offer it, then I can just move right in. And I already have that trust.

Well, Gwen, I would love to hear what advice you would give someone who's thinking about starting a business of their own. Well, are they sure? Is that what they really want? You didn't want that in the beginning, and then you ended up doing it anyway. Joke aside, honestly, I would tell them, are you ready to commit seven days a week, 24 hours, being the front desk, the receptionist, the cleaner, the janitor, and then also doing what you're supposed to do for that business for at least the first or second year of the business. And if you can say yes to that, then it's a great opportunity. I think that people don't realize when you open the business, you are everything. You are literally everything until you have that capital coming in to now hire other people to help you with that. There's a lot of opportunity out here in this country.

There's so much money out there that could be made. And if you can just focus on what you have already going like inside your business, then you're gonna be fine. Because I think we get lost and we create stories in our head and we start to look at our competition. Like the next salon down the street from me, what are they doing? And I always tell the girls salon down the street from me, what are they doing?

You know, and I always tell the girls, you know, you guys don't worry about what they're doing. We just have to worry what we're doing. And it's going to be fine. You know, I don't think it's a competition. I think everyone have a different niche. And that's what it is. You know, that's why it's such a great world to live in. Well, thank you so much for talking with us and sharing your story, Gwen. Yes. No, thank you for having me on here. And now let's close out with some takeaway tips for our nerdy entrepreneurs. First, if you are opening a brick and mortar business, you're going to have to jump through a lot of hoops. Be prepared to invest time and money into licensing, permitting, and zoning issues. Second, there are lots of different ways to finance a business.

SBA loans, which Gwen talked about, are backed by the U.S. government and issued by banks and other financial institutions. They tend to have competitive interest rates and long repayment terms. Friends and family may also be willing to invest in you. Ask for help and shop around to put together the financing that works best for you. And finally, keep an eye out for new revenue streams. You never know when you might have the chance to diversify. And that's all we have for this episode. Do you have a money question?

Turn to the nerds and call or text us at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Also visit nerdwallet.com slash podcast for more info on this episode. And please remember to follow, rate, and review us wherever you're getting this podcast. This week's episode was produced and edited by Rosalie Murphy with help from me. And here is our brief disclaimer, thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance

writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.