The challenges of opening a salon - luke jacob, spitalfields

Opening a salon business in the depths of the recession was always going to be a challenge, but for Luke Coster, owner of the Luke Jacob salon in London's Spitalfields district, it was a case of ignore the doom and gloom mongers and just go for it.

Since making the decision to become a salon owner in 2011, it has been a huge learning curve for Luke and he has overcome numerous hurdles to realise his ambition. The result of his hard work is a highly professional, contemporary salon in one of the most fashionable areas of London. However, without a steely determination to succeed, Luke could easily have lost hope along the way.

The first challenge was to believe in his own convictions in an economic environment that was encouraging negativity towards entrepreneurial spirit. Says Luke: "There is no right time to start out, and in today's climate if you listen to the naysayers you'll never open. I've been lucky enough to have worked with, and been part of, award-winning salon teams and been coached by some great names in the industry. I knew it was my time when I stepped back and thought 'I can do that'."

While Luke was confident he had the talent and experience to make a success of his own salon, what he didn't have were the finances. And it was here his challenges began.

Recalls Luke: "I approached almost every retail bank. None would even venture past the conversation of lending to me. Through a great deal of research I was made aware of the National Loan Guarantee Scheme."

The NLGS uses Government guarantees on unsecured borrowing by banks, enabling them to borrow at a cheaper rate. Participating banks pass on the entire benefit that they receive from the guarantees to businesses across the UK through cheaper loans. 

Recalls Luke: "With the help of some contacts, a few expensive lunches, constant pestering and weeks of research, I was put in touch with Tom Lincoln, Home Counties business manager at HSBC. Tom bought into the dream, and through him we edited and re-edited the business plan to produce a workable 74-page plan that he could pass to credit."

The wait to see if the application would be successful was painful - and costly.

Explains Luke: "The NLGS is based on the location of the business. So we secured premises and then had to sit - all the time paying rent - and wait two months while the application was processed. In December 2012 we received the green light from the Government."

The financial challenges didn't end there, as Luke had spent a chunk of capital paying rent while he waited to hear about the application. The bank insisted the full amount of capital be intact before releasing the additional funds.

Says Luke: "In January 2013 I hit the phones hard. Family and friends came to the rescue, as well as a very understanding landlord."

The next step in Luke's mission was to project manage the salon design and build. Says Luke: "This again involved hours of research and sourcing from international suppliers. Alan at YY Design was a patient advisor during this time, taking calls from me at all hours of the day."

Continues Luke: "The site consists of the ground floor and basement. The ground was an empty shell. But the basement was in a state of disrepair, with major restructuring and building work needed. Constructing walls, upgrading the old Victorian water mains and even constructing staircases. We also decided to drop the level of the ground floor, turning a useable floor space into yet more of a project. The 500sq ft of basement is being used as storage, awaiting development at the end of the year. Having the space to expand presents opportunity in the future."

One element of starting the new business that proved relatively easy was securing the right staff. "Once I advertised for staff, the response was huge," says Luke. "One thing I didn't want to do was actively poach staff from other salons. This is a small industry and I respect my previous employers and mentors."

Luke's previous experience as an interviewer and staff trainer made the selection process fairly straight forward. He says: "From the word go, I insisted on taking people who wanted to be part of something new and exciting."

With everything in place, it was time to start heavily promoting the salon. Luke targeted local businesses, approaching their human resources teams and offering a free service to all their front of house and HR staff. "Once they came and experienced what we had to offer they promoted us within their offices and rebooked at full price."

Luke also embraced social media platforms, including Twitter. "From spouting naive scorn about Twitter six months ago, I now have four business accounts, all updated a minimum of three times a day at peak viewing times. We now have around 1,000 followers, while our Facebook page reaches more than 40,000 people a day."

Luke also joined a number of local organisations - Spitalfields Society, Spitalfields Community Group and he is a founding member of the East End Traders Guild. "We have jumped straight into the local community. I've signed petitions, fought the boundary commission, championed local traders and even commissioned an art project. As a result, the local businesses and residents have supported us back."  

It's still early days, and the salon has been open less than a year, but Luke is confident he and the team have built solid foundations.

"We've got a formula that appears to be working, but there is still a mountain to climb," he says. "As we grow I need to grow and mould that formula with us. By understanding every minute detail of the business, I am aware of every wind change and can trim the sails accordingly."

Fair weather or foul, Luke is sure to ride the wave and, ultimately, succeed.