Disillusioned By Salon Business Model, Entrepreneur Opened Her Own Shop

By Neal St. Anthony
Star Tribune (Minneapolis)

WWR Article Summary (tl;dr) Salon owner Katie Steller says, “A big part of why I started my own business was I felt devalued,” Steller said. “Most salons pay minimum wage, and the stylists are dependent on tips.

Star Tribune (Minneapolis)

Katie Steller, owner of Steller Hair Co. at Central and Broadway Avenues NE., started inauspiciously in the styling business six years ago.

In her parents’ kitchen.

Steller, 28, an Aveda Institute graduate, started her own company in 2012 because didn’t like the traditional model she had found in a big salon: Pay the stylists minimum wage plus whatever tips they can finagle from customers.

“My haircuts in my first year were $30,” she recalled of her first salon job. “And I would make about $4 of that, if I was doing a 30-minute haircut.”

Steller’s then-husband had a good job with benefits, so she took a flier on entrepreneurship.

One of several bankers who turned her down for a loan referred her to WomenVenture, a nonprofit that provides counseling, business planning and financing to fledgling female entrepreneurs. WomenVenture is also a certified lender with the U.S. Small Business Administration (SBA).

In 2013, Steller launched Steller Hair with a little savings, a lot of hope, a plan and a $65,000 SBA loan, including a 2 percent fix-up loan from the city in the long-vacant former Land O’Nod mattress factory.
She was one of the first tenants in what is now called “The Broadway,” a bustling place with tenants including Spyhouse Coffee Roasters and 612 Brew.

Steller hired a couple of entrepreneurial stylists who were attracted by her model.

They start out making 45 percent of what they bring in, or $15 to $18 an hour if their commission revenue is less than the hourly rate. Despite some obstacles, Steller Hair has worked. And Steller paid off the $65,000 loan on time earlier this year.

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