Beauty Business Basic Beauty Business 2 — Questions and Answers
Question 1: What is the primary purpose of a business plan for a new beauty salon?
- To secure financing and guide operations (Correct answer)
- To set employee dress codes
- To design the salon logo
- To choose paint colors for the interior
Correct answer: To secure financing and guide operations
A business plan outlines financial projections, target market, and operational strategy, which is essential for securing loans and guiding day-to-day decisions.
Question 2: Which federal agency requires beauty businesses to follow workplace safety regulations?
- OSHA (Correct answer)
- FDA
- FTC
- EPA
Correct answer: OSHA
The Occupational Safety and Health Administration (OSHA) sets and enforces standards for safe working conditions in beauty establishments.
Question 3: What does the term 'retail backbar' refer to in a salon business context?
- Professional products used during services (Correct answer)
- Products sold directly to clients
- The reception desk area
- Storage for cleaning supplies
Correct answer: Professional products used during services
Backbar products are professional-grade items used by stylists during services and are not typically sold to walk-in customers.
Question 4: Which pricing strategy involves setting service prices just below a round number, such as $49 instead of $50?
- Charm pricing (Correct answer)
- Premium pricing
- Bundle pricing
- Cost-plus pricing
Correct answer: Charm pricing
Charm pricing uses prices ending in 9 or 99 to create a perception of better value in the customer's mind.
Question 5: What is the most common legal structure chosen by independent beauty professionals starting out?
- Sole proprietorship (Correct answer)
- C corporation
- Limited partnership
- Nonprofit organization
Correct answer: Sole proprietorship
Most independent beauty professionals begin as sole proprietors because it is the simplest and least expensive business structure to establish.
Question 6: In a beauty business, what does 'client retention rate' measure?
- The percentage of clients who return for repeat services (Correct answer)
- The number of new clients gained per month
- The average tip amount per service
- The number of services performed daily
Correct answer: The percentage of clients who return for repeat services
Client retention rate tracks how many existing clients continue to book appointments over a given period, reflecting customer loyalty.
Beauty Business Basic Beauty Business 2
What is the primary purpose of a business plan for a new beauty salon?