We followed Cutting Room Creative Owners Edwin and Fiona Johnston as they bought a new salon space to expand their business. Here’s Part 1 of how they survived a huge renovation around the holidays. Look for the big reveal of their new look in the April issue of Salon Magazine!
With their current lease expiring in December, Edwin and Fiona Johnston decided it was time to purchase a space to build their salon’s business. They also saw it as an opportunity to invest for their future retirement.
What did they consider when picking a new, permanent home for the Cutting Room Creative?
Choosing a new salon space: location, space and potential.
“The city has grown and stretched out so wanted something that was central to the North end, close to major intersections, with good visibility and parking,” says Johnston. The Johnstons felt that the new modern design of the building and high-traffic location would generate a buzz within the community, helping bring new and old clients into the salon. “Sometimes you have to do something to spark your business,” says Johnston.
Situated in a new commercial development, the space had everything they needed, and a major space upgrade, giving them the chance to create a whole new floor plan that spanned two floors. “This is the first of 6 phases, so we see lots of potential for growth with like-minded professional businesses.”
But before they purchased their new building, here’s how Edwin and Fiona set out their budget, an important step for any salon owner embarking on a renovation.
Do your research before choosing a lender.
Get everything broken down and explained clearly from whoever you’re planning to lend from. Your money lender may not cover all construction costs like site management, design, GST and waste clean-up, so make sure you’re aware of the total you’ll be spending on your own. You don’t want to be locked into a rate you won’t be able afford when a better deal was out there.
Give yourself enough time for financing.
It can take up to 3 weeks to get an appraisal of your current property if you already own. Down payments are larger than the normal 10% for home. Commercial banking rules are different, so you’ll need more cash saved up front to buy.
Have extra cash on hand for unexpected costs.
Make sure that you have extra cash or credit. It can cost more than you expect during the renovation, as you will still have your regular salon bills to keep paying on top of construction costs. Using a line of credit to pay for costs is trickier with commercial ventures. Rather than coming directly out of your account all expenses will be invoiced to your bank, and they may only cover 75% of the cost of that invoice.