Chelle Neff | Crain's Austin

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Chelle Neff

Background:  

Urban Betty Salon is one of Austin’s largest independent hair and makeup salons. Its stylists can accommodate every kind of taste and style, from soccer mom to hipster millennial to just plain hippie. 

The Mistake:

I moved to Austin out of Abilene the day after I graduated from high school. I had studied cosmetology, and had worked as a receptionist at Supercuts in Abilene, so I thought I’d do that and see if I liked it. Eventually, I moved to another salon and worked my way up through the ranks. I learned to do wedding hair and color, and when I got confident at that, I moved to one of the more elegant salons and built up a nice clientele.

When I finally had a loyal following, I went to work at a cool hip downtown salon. I’d been there for about a year when it went through a restructuring and wound up cutting the stylists’ pay by 5 percent. It turned out to be a great thing because it forced me into becoming an independent contractor. I rented part of a suite, and that was the stepping stone to opening my own business.

In 2005, I opened Urban Betty in 1,500 square feet with six chairs. I brought over another stylist as an independent contractor. I took out all the business loans and bootstrapped it myself. I was doing hair six days a week. Slowly,  people came and kept coming back. I rented my chairs out to independents or “booth-renters.” I didn’t want to be anyone’s boss, I just wanted enough booth-renters to pay the rent. My plan was to make my money by doing hair; I figured I’d get 100 percent of that. I was only 27 years old. What did I know about all the expenses that go into running a business?

Then one day, a girl called me and said she really wanted to come work for me and be my assistant – as an employee. She had been working with someone I knew, and that salon had closed. I didn’t want all the legal hassle and responsibility of an employee. But I finally brought her on, and after a few months I decided it wasn’t that hard. I put her on the floor doing hair, and found that having an employee was much better for me financially than having booth-renters with their own stations who came in only when they wanted to.

If I had I stayed with the idea of not wanting to be anyone’s boss, my salon would have failed.

The Lesson:

If I could go back in time, I would have never worked with independent contractors. I would only have commissioned employees. Now when I help mentor other salon owners and people in the industry, I tell them not to get involved with booth-renters. It seems easier, but it will bite you in the long run. Until you're actually in business, you don't listen to the advice that can really help prevent the kind of mistake you don't want to make.

Now it’s 100 percent employees – closing in on 30 – at Urban Betty. Everyone is happier and produces better under this structure. There’s nothing wrong with independent contractors, as long as your salon is all independents. My goal was to own, manage and market a salon. At the end of this year, I’m going to retire from doing hair. I’m just going to be managing. People have no idea how much money it takes to run a salon. If I had I stayed with the idea of not wanting to be anyone’s boss, my salon would have failed. I’d still be behind the chair full-time.

Follow Chelle Neff on Twitter at @UrbanBetty

Pictured: Chelle Neff | Photo courtesy of Urban Betty Salon

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