5 Things to Consider About Self-Employment
This is a hot topic! Whilst some salon owners base their entire business model on a self-employed team, others steer well clear of it. I was looking at it as an option again recently and came up with the same conclusion – it’s not something that works for me.
Not only does it not work for me, I fail to see how it benefits the individual either. However, as ever, I’m all ears to hear your thoughts and other sides of the argument…
ONE BRAND VISION
I believe that when you build a team, your aim is to be stronger together. Successful businesses maintain consistency in their services and unite in one vision under one salon brand. When you take on a self-employed stylist, you need to think about how much of a priority your reputation will be to them personally. No one is disputing the standards of the self-employed, but damaging reviews can be hugely problematic for your business and if things go wrong, who fixes it?
SETTING STANDARDS
Will you fund training for a self-employed stylist that works in your salon? And if you don’t, can you guarantee their future development in the same way as you can with a team member? At Smith England, I make sure that everyone is motivated with opportunities for growth. Loyalty to my business is reciprocated with a commitment to their careers. Learning, training and development should be a continual process, but when you become self-employed, finding the time, the cash, and the motivation to invest in this side of your career can become a lower priority.
DOES IT MAKE FINANCIAL SENSE?
Let’s face it, when most people choose to go self-employed it’s for one of two reasons: freedom or greater financial reward. But honestly, do you achieve either? Working less hours or taking annual leave whenever you like may feel like a bonus, but don’t forget those hours not worked will be unpaid. There’s no sick pay or company benefits and there are plenty of additional costs besides.Yes, you may feel like you’re putting more profit in your pocket, but what about the accountant to file your tax return, indemnity insurances, pensions, equipment, and training –this will all suddenly need to be covered by you. Not as appealing now, right?
HR HEADACHES AND TAX
You need a watertight contract to avoid any dispute or expensive legal action if things go wrong. After extensive chats with an HR consultant, I’m all too aware of the pitfalls. Be careful that your chair renter isn’t slowly heading out the door as a freelancer with a whole load of your clients in tow. You also need to make sure that any arrangements don’t fall foul of the HMRC rules. If a self-employed person in your salon appears to have similar rights as an employee, you could be liable for backdated tax claims and benefits.
THE GREY AREAS
There are many other big and small details you need to work out before you signup to an agreement. Think about how you will measure and monitor how much stock your renter is using for colour services? How will you manage and incentivise retail sales? Of course, you’d need to cover all these aspects in a rental agreement, because trust me, it all gets complicated and controversial if any detail is overlooked. Equally, you can start to look pedantic if you don’t work out clear boundaries on what is and isn’t permitted under the agreement.
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