Spa Owner Takes Gamble on Business Expansion
Another day, another gloomy economic forecast. The Commerce department today reported that consumer spending in the US dropped by more than expected last month, prompting one economist to declare that ‘consumers have thrown in the towel’. Conventional wisdom would suggest that now is not the time to expand a business. But as Keith Shortall discovered, one small business owner has chosen to buck the trend.[Listen to the interview]
Hair stylist Jennifer Leigh is being debriefed by long-time client Dhara Williams, as the two craft a plan of action for a shampoo and cut that will bring Williams’ look back to where she’d like it.
The walk back to the sink area is much longer that it was in Leigh’s last salon space upstairs from this first floor corner storefront on Congress Street in Portland. But Leigh says despite the dire warnings about the economy, she decided it was a good time to expand: “Yeah the world seems to be downsizing, but we’ve decided that when opportunity knocks you answer.”
The opportunity, was to increase the space five fold, from 480-square feet to 25-hundred square feet, which Leigh acknowledges may take her somewhere outside her comfort zone. “There is a little bit of risk. I just feel that if you focus on the risk and not the possibility, you can’t move forward, you could stagnate. I really excel in living outside my comfort zone. I lived in it for a really long time and now I’m going outside the comfort zone and it’s good.”
Leigh is investing in some new equipment, and an updated computer system. She’s also hired more people, going from a one-woman shop with an apprentice, to a staff of six, including an esthetician and three massage therapists. To finance the expansion, she’s used some of her own cash and put some on a credit card. But she also sought a loan from Bangor Savings Bank, and it came at an awkward time. “I walked into the bank on the day the stock market crashed with that ‘900 point drop’. The banker I spoke with basically told me that they were not a bank that invested in suspect loans and that they weren’t really in any trouble. They also told me that they didn’t give loans to people they didn’t think could pay them back. So they looked at my business plan, and called me back within twenty four hours and said ‘Let’s do this thing.’”
“Yah..it was very quick.”
Leigh is also confident that her business called “O2″ has a kind of natural hedge against economic downturn. That hedge comes in the form of long time loyal clients like Dhara Williams. “Well, no. A woman doesn’t trust just anybody with her hair. No.” Williams, who has been coming to Jennifer Leigh for 13 years, says there are certain things that consumers like her will not do without, even when the economy takes a dive. “They will cut back to a certain extent, but they’re not going to cut back on things that are important to them, and a woman’s looks are important to her. Especially in times when things are not so good, and not looking so good, then you do want to feel good about yourself. It changes your whole day.”
As Jennifer Leigh prepares for the arrival of her new staff, and the expanded offering of services from facials to pedicures, she says she’s confident that what’s happening in the economy will not get in the way of her business plan. “Well, only time will tell if I’m being wise or not. But I think that there seems to be two schools. You can believe that we’re going to be in something worse than the Depression, or you can believe the other camp that believes that nothing is going on and this is all a myth, and this is a conspiracy to bring us down. I think I tend to fall in the middle.”
The Maine Association of Community Banks reports that loan growth has slowed. The latest numbers for July through September are due out in a few weeks.