18 - Cengage



Name:

Instructions: Answer each question using information from your readings and lessons as a guide.

1. You have no future plans to own your own business. Why is it still important for you to understand the rules of business that affect salons?

(Answers will vary, but may include the idea that knowledge is power. An employee who understands his or her rights within an organization, how the business makes money, and how the overall market works is more likely to achieve personal success than a person who simply accepts as correct what he or she is told by an employer.)

2. In a booth rental arrangement, a practitioner generally does what?

a) (Rents a station or work space in a salon from the salon owner)

b) (Is solely responsible for his or her own clientele, supplies, record keeping, and accounting)

c) (Pays the salon owner a weekly fee for the use of the booth)

d) (Becomes his or her own boss for a very small amount of money)

3. What are the obligations of renting a booth?

a) (Keeping records for income tax purposes and other legal reasons)

b) (Paying all taxes, including higher Social Security rates)

c) (Carrying adequate malpractice insurance and health insurance)

d) (Complying with all IRS obligations for independent contractors)

e) (Using your own telephone and booking system)

f) (Collecting all service fees, whether they are paid in cash or via a credit card)

g) (Creating all professional materials, including business cards and a service menu)

h) (Purchasing all supplies, including back-bar and retail supplies and products)

i) (Tracking and maintaining inventory)

j) (Budgeting for advertising or offering incentives to ensure a steady influx of new clients)

k) (Paying for all continuing education)

l) (Working in an independent atmosphere where teamwork usually does not exist and salon standards are interpreted on an individual basis)

m) (Adhering to state laws and regulations)

4. How is a mission statement different from a vision statement? (A mission statement describes the details of a business, such as the kinds of services it will offer, the market it will serve, and the quality of the services. It lays the foundation that helps realize the vision for the salon. The vision statement takes a larger view of the business—it is more of a picture of what the ideal business will be like.)

5. Why is the name you choose for your salon important?

a) (It explains what your business is)

b) (It identifies how your business is different from your competitors’ businesses)

c) (It influences how clients and potential clients perceive the business)

6. List the basic factors to carefully consider when opening a salon.

a) (Name)

b) (Location)

c) (Written agreements)

d) (Business laws and regulations)

e) (Insurance)

f) (Salon operations)

g) (Record keeping)

h) (Salon policies)

7. What should be included in your business plan?

a) (General description of the business and the services it will provide)

b) (Area demographics)

c) (Expected salaries and cost of related benefits)

d) (Operation plan)

e) (Projected income and overhead expenses)

8. Describe a business that is owned by a sole proprietor. (The proprietor is the owner and manager of the business, determines policies, has the last say in decision making, assumes expenses, receives profits, and bears all losses.)

9. Describe a partnership. (Two or more people share ownership, though not necessarily equally. They pool their skills and talents, making it easier to share work, responsibilities and decision making. They assume the other’s unlimited liability for debts.)

10. Describe a business owned by a corporation. (Ownership is shared by stockholders. They can raise capital by issuing stock certificates or shares. Income tax is limited to the salary you draw, not the total profits of the business.)

11. What is a franchise? (A franchise is a business organization in which the franchisor, or the firm that is already successful, enters into a continuing contractual relationship with other businesses, called franchisees. The franchisee operates under the franchisor’s trade name in exchange for a fee.)

12. List the eight parts of a business plan.

a) (Executive summary)

b) (Vision statement)

c) (Mission statement)

d) (Organizational plan)

e) (Marketing plan)

f) (Financial documents)

g) (Supporting documents)

h) (Salon policies)

13. If you choose to purchase an existing salon, what should your agreement to purchase include?

a) (A financial audit, to determine the actual value of the business, once the current owner’s bookings are taken out of the equation)

b) (A written purchase and sale agreement to avoid any misunderstandings)

c) (A complete and signed statement of inventory, goods, fixtures, etc., indicating the value of each)

d) (If there is a transfer of a note, mortgage, lease, and bill of sale, the buyer should initiate an investigation to determine if there is any default in the payment of debts)

e) (Identity of owner)

f) (Use of salon’s name and reputation for a definite period of time)

g) (Disclosure of any and all information regarding the salon’s clientele and its purchasing and service habits)

h) (A noncompete agreement stating that the seller will not work or establish a new salon within a specified distance from the present location)

i) (An employee agreement, either formal or informal, that lets you

know if the employees will stay with the business under its new ownership)

14. A lease should specify the following:

a) (An exemption of fixtures or appliances that might be attached to the salon so that they can be removed without violating the lease)

b) (An agreement about necessary renovations and repairs, such as painting, plumbing, fixtures, and electrical installation)

c) (An option from the landlord that allows you to assign the lease to another person)

15. What can you do to protect your salon against fire, theft, and lawsuits?

a) (Ensure that your business has adequate locks, fire alarm system, and burglar alarm system)

b) (Purchase liability, fire, malpractice, and burglary insurance and do not allow these policies to lapse while you intend to remain in business)

c) (Become thoroughly familiar with all laws governing cosmetology and with the sanitary codes of your city and state)

d) (Keep accurate records of the number of employees, their salaries, lengths of employment, and Social Security numbers as required by various state and federal laws that monitor the social welfare of workers)

e) (Check with your regulatory agency if you have any questions about

a law or regulation)

16. Smooth business management depends on the following factors:

a) (Sufficient investment capital)

b) (Efficiency of management)

c) (Good business procedures)

d) (Strong computer skills)

e) (Cooperation between management and employees)

f) (Trained and experienced salon personnel)

g) (Excellent customer service delivery)

h) (Proper pricing of services)

17. When interviewing potential employees, consider the following:

a) (Level of skill)

b) (Personal grooming)

c) (Image as it relates to the salon)

d) (Overall attitude)

e) (Communication skills)

18. What are some ways you can share your success with your staff?

a) (Meet payroll obligations)

b) (Offer benefits to hardworking employees)

c) (Conduct scheduled employee evaluations with staff members)

d) (Create and stay with a tipping policy)

e) (Put your entire pay plan in writing)

f) (Create incentives by giving your staff opportunities to earn more money, prizes, or tickets to educational events and trade shows)

g) (Create salon policies and stick to them)

19. A receptionist must have the following qualities:

a) (Appearance that conveys your salon’s image)

a) (Knowledge of the various services offered)

a) (Unlimited patience with clients and salon personnel)

20. When using the telephone you should:

a) (Speak pleasantly and clearly, and use correct grammar; a “smile” in your voice counts for a lot)

b) (Show interest and concern when talking with a client or a supplier

c) (Be polite, respectful, and courteous to all, even though some people may test the limits of your patience)

d) (Be tactful; do not say anything to irritate the person on the other end of the line)

21. A practitioner is not available at the time a client requests. How can you handle this situation?

a) (Suggest other times that the practitioner is available)

b) (If the client cannot come in at any of those times, suggest another practitioner)

c) (If the client is unwilling to try another practitioner, offer to call the client if there is a cancellation at the desired time)

22. What kind of advertising venues are available to salons?

a) (Newspaper ads and coupons, or coupon books)

b) (Direct mail to mailing lists and your current salon client list)

c) (Classified advertising in the local phone book or yellow pages directory)

d) (E-mail newsletters and discount offers)

e) (Web site offerings)

f) (Giveaway promotional items such as combs, emery boards, key chains, refrigerator magnets, or calendars)

g) (Window displays that feature and attract attention to the salon and your retail products)

h) (Radio advertising)

i) (Television advertising)

j) (Social networking)

k) (Community outreach by volunteering at women’s and men’s clubs, church functions, political gatherings, and charitable affairs and on television and radio talk shows)

l) (Client referrals)

m) (Videos may be used in the salon to promote your salon and its goods)

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