Why Your Nail Shop Went Broke

While doing research for my new book, “Why People Don’t Do Their Jobs”, I came across the following scene in a strip mall, and decided to send a message to answer the question “why your nail shop went broke.”

Yes, that’s right, for whatever reason, known only to nobody, there are four nail shops located in this place, immediately next to each other. All of them were “open” but had no customers.

The place was right next to a Wally Mart, and the nail shop in the kiosk in front of the store was completely full.

It is pretty clear that there is an ongoing problem with nail shops going broke. I am not picking on nail places, by the way, exactly the same thing goes with any kind of retail store, including hair places, vape shops, boutiques, burger joints or anything else.

Essential Skills for Running a Nail Shop

As a public service, in order to help you, the reader, live out the American Dream, I am now going to lay out for you the three essential skills for running a nail shop:

1. Ability To Do Nails
2. Ability to Do Math
3. Ability to Attract Customers

Let’s take these one at a time. In order to keep your nail shop from going broke.

Ability to Do Nails

This is the one I know the least about, but to make a long story short, if I were to start a nail place, I would hire someone. In my opinion, this is the least important skill needed to keep your nail place from going broke.

Ability to Do Math

I know a lot about this one.

Let’s say, theoretically, that you decide to open a nail place. You miraculously get your equipment and furnishings for free. Maybe you go into the local community and rent yourself a kiosk. You want to know in advance why your nail shop went broke, so that it doesn’t.

I did a little checking on this, and for a 1200 square foot retail space in Atlanta, you can expect to pay somewhere between $20 and $35 per square foot per year.

So your first calculation is how much your monthly rent and utilities are. Let’s be generous and say that your rent is $33 per square foot per year, and you’re renting a 1200 square foot store (30X40)

Let’s also be generous and say that your utilities, including heat, electrical and wifi will only come to around $250 per month.

The Sales Side

Okay then, now we have to calculate how many customers we need to pay the rent and keep the doors open.

Let’s say that a nail job takes an hour, and costs your customers $50.

Assuming you hire a $15 per hour nail technician, have to pay $5 per customer for supplies, and a dollar for “other” you’re going to have a gross margin per customer, not including taxes, of $29 per customer.

Now that we know the margin, we can calculate the number of customers we need to keep the doors open.

So if you keep your shop open six days a week, you’re going to need roughly 5 customers per day just to keep the doors open.

But, you haven’t paid yourself yet. Let’s say that you want to pay yourself the amount you would have made in a $15 per hour low wage job:

Paying Yourself

Here’s the next calculation:

Okay then, all other things being the same, using the same labor rates and selling price as before, you’re going to need 9 customers per day to pay yourself as much as a low wage worker would make.

Do you see a problem? You’re already open more than 8 hours per day, since each job takes an hour.

Your further problem is that your customers aren’t going to come into the place one per hour. They’re going to come in either at lunchtime or when they get off work. That means you’re going to have to manage that somehow, either by hiring extra workers or some other way. You’d better have room in your shop for several chairs.

And, if one day you don’t have any customers, it means that you’re going to need more customers the second day in order to make up for it.

So now you see the last problem. You need to be good at attracting customers.

Attracting Customers

Now you see the importance of math. You need to advertise, which costs money, or work social media, which also costs money, or think of some other way to attract people to your store.

Your friends, assuming you have any, aren’t going to pay your bills. You’re going to need 225 customers per month, depending on how many times per month they need to have their nails redone. Do you have that may friends? 

No you don’t. 

But thanks to math, you know what your job is. Let’s say, to be generous, that you spent $100 for advertising on Facebook, and for that, you got 20 additional customers.

You get the $24 gross margin for your new customers, so it was worth it. You did well, But, if your $100 in advertising only got you 1 additional customer, you lost money.

your breakeven number is about 3. You need to make $100 in additional gross margin for every $100 you spend.

www.jimshell.com/quality-systems-training/

Your advertising, whatever that looks like, needs to be more efficient than that. Also, your customer experience needs to be such that the same customers keep coming back so you don’t have to pay the $5 to re-acquire them.

This is Why Your Nail Shop Went Broke

Now you can see the problem. Unless you can get people through the door, no amount of doing the nails yourself is going to pay the rent, plus pay you.

Even if you advertise, your acquisition cost needs to be efficient enough to pay for the effort.

They don’t teach this stuff in school, unfortunately. That’s why your nail place went broke. You may or may not have the skills to do the nails yourself, that’s not enough. At some point the critical skill needs to be attracting customers. If you can’t do that, you have a problem.

PS: What if you want to make more than $15 per hour? You’re going to have to get into a more profitable line of work, or else have lower overhead, or else charge more for your service. Either way it is going to be difficult.

This is why turnover on these little strip shops is so high, and why so many people struggle in these little businesses.

PS: Speaking of doing something that requires a little time but no overhead, here is my link to my online class for Udemy:

https://www.udemy.com/course/how-not-to-fail-at-iso9001/learn/lecture/34733460#content

And here is my Amazon link to my book, How Not to Fail at ISO9001.

• doing math
• gross margin
• overhead
• why people don't do their jobs
• workforce education