I recently spoke to a former employee of KPMG's M&A department in New York who, after losing his job in 2008, opened up his own business in the Wall Street area: a hair salon. Since its opening in 2009, the salon has been featured in numerous magazines, including Marie Claire, Allure, Nylon and Time Out New York, and on web sites such as DailyCandy and Gilt City.
You were laid off from your job at KPMG as part of wide-sweeping cuts in July 2008. Were you surprised that you lost your job?
I worked in the M&A practice focusing on the financial institutions sector and it had been slow for a while, I hadn't worked on a deal in months, but up until the middle of 2007 we were still actively hiring. KPMG was still offering employees several thousand dollars if they referred a new hire. And it's always rare for accounting firms to make layoffs. So, yeah, I was surprised.
What did you do right after you were let go?
I enjoyed my few months of severance. I sat in Sheep's Meadow and read a lot.
And after the severance ran out?
This guy I know had a small real estate company. He had several properties in South Beach and he brought me on, part time, to deal with the financial end, to be his right-hand man. But he turned out to be one of those real estate guys who are classically over-leveraged. His financing dried up and he defaulted on the properties. But around that time I'd also been talking to my current business partner about perhaps doing something together.
How'd you two meet?
I'd always gotten a $20 haircut, but my sister and brother-in-law recommended I spend a few more bucks and go to their stylist. As a result, she and I became buddies—we were just friends, not best friends, and we weren't sleeping together—and we started talking about opening a salon. It seemed to be a good fit: she has more of a creative mind, and I'm more of a numbers guy, with perhaps a little more business savvy.
When did you open?
After a lot of talking, a handful of things finally came together: we found a space and an interior designer friend of mine offered to design the space at an affordable price. We signed a lease in February of 2009. The build-out took a few months, and we opened in June of 2009.
What was the most difficult part leading up to the opening?
Negotiating our contract was very difficult. Figuring out a fair profit-sharing ratio and other financial aspects weren’t easy.
Where did you get the financing for the salon?
I put up the money.
How did you prepare for the opening? Did you know anything about running a hair salon?
In the months leading up to the opening, I went to Barnes & Noble and bought books on entrepreneurship as well as books like How to Open Your Own … fill in the blank. They were good for reference. But the best resources were other salon owners. Through friends, I'd gotten in touch with some salon owners in Chicago (since they weren't in New York, and not in competition, they freely offered their advice). Also, I will say that that my experience at KPMG helped. Working in M&A, I was constantly looking at different types of companies in various industries. And the hair salon business is not the most complex of business models. The most difficult part to understand is why people are willing to spend so much money on their hair.
What's been the most challenging aspect of running the salon?
It might be cliché, but it's true that you have no idea what you’re getting into with starting your own business until you start your own business. There are so many things you don't anticipate. For example, if you work for a company, you only have to worry about doing one job function. But when you have your own business, you also have to do the IT function, the HR function and other functions. At KPMG, I could call IT or HR 24 hours a day if I had a problem. Now, if my computer's not working, I have to figure how to fix it. What happens is you end up making friends with people who’ve been there, other people who've started businesses. You find out what they do, how they've survived.
Were you afraid it might not work out?
The months leading up to the opening were exciting times. You're focusing on how to get the place operational. You're getting the computer systems in place, employees in place, and the interior all set. But then I remember about two days before the opening there was this terrifying shift in mindset. It went from how do I get this place operational to how do I get people to come through the doors.
You've been open for almost two years now. Any plans for another salon?
We haven't maxed out our current location yet, but when we do we'll probably look for a larger space, or another location. It's tough to open something brand new and build it up, but we’re downtown near Wall Street where rents are cheaper than they are uptown or in the West Village or Soho. Aside from a larger or second location, we’ll probably start a product line. There are great profit margins in product lines. But we need to build our brand a little more before we do that.
What's been most surprising with respect to running your own business?
You know how the financial sector has been vilified lately as being greedy and filled with shysters, while small businesses have been looked at as the angels of the economy? Well, I've come across more shysters in the past year and half than I did in all my years working in finance. At KPMG, I dealt with a lot of bankers and I never really felt integrity was an issue. But when you work with a lot of other small businesses (such as vendors), you come across a lot of people with shady motives—people trying to use you for some shady promotion, like someone asking you to give them 100 free haircuts in exchange for something. Small businesses are subject to zero regulations.
What's the best part about being your own boss?
Not having to answer to anyone else is great. Of course, it's also difficult at times—you can't pass off any responsibilities to anyone else—but working for yourself is definitely great.
Could you see yourself ever working for someone else again?
That's one of my biggest fears—and motivators. I get nervous when I start to think about what would happen if this doesn't work out, what if this doesn't give me enough money to live like I want to live. I'd be terrified to work for someone else again. I think I'd be a really bad employee.