Co-founder of The Colour Bar Salon Lorena Martinez left her corporate job to build a beauty business that’s challenging her industry. She speaks with Elian and Juleyka about restructuring the company to comply with changing employment laws, supporting her team and competitors, and how an abundance mindset helped her make practical business decisions as she scaled. Our Latino Business Moment of Zen inspires us to be givers and receivers who support ourselves and others.
This episode was supported by our LBAN Alumni Founding Sponsors Windrose Vision, VND and Fig Factor Media.
Elian Savodivker:
Hello, and welcome to Scaled: The Latino Business Story. I'm Elian Savodivker, director of engagement at LBAN, the Latino Business Action Network.
Juleyka Lantigua:
And I'm Juleyka Lantigua, SLEI-Ed alum, go cohort 10! And founder and CEO of LWC Studios.
Savodivker: On this show, Latino business owners from all over the country share their journeys as entrepreneurs and with their stories and insights, they help us contextualize the world class research coming out of LBAN. Our guest today is Lorena Martinez, co-founder of The Colour Bar Salon. Lorena is also an alum from SLEI-Ed.
Lantigua: Yeah, she is another amazing, inspiring Latina for me to just breathe in the same air that she's breathing and feel proud that she's out in the world just taking over. She and I have a similar founder story, which is that we tried the traditional corporate route, and then we were like, "I need to be the change I want to see in the world." And we went and started our own companies. So I am doubly proud of her for that courage and that believe in herself that it takes to take that leap.
Savodivker: And her commitment to her craft, her business and to herself in spite of naysayers is one of those absolutely amazing stories. I really connected with her personal immigration story. That was something that as an immigrant myself, was incredibly important and that she's had this powerful drive and this faith in herself that really made her successful as an entrepreneur.
Lantigua: She's the real deal, honestly. She's so clear about her vision for her company, but more importantly, she's so clear about how that vision must drive all of the decisions that she and her team make, from expanding the business to supporting who might be considered people who might be considered competitors through COVID. She took that on, that's a huge responsibility. And then she continued to expand and grow by restructuring the business to comply with the state's changing employment laws. It was a lot during a very short period of time. And as she tells us, she just asked herself two questions. What kind of company do I want to have? And how do I stay aligned with my vision? Those seem like benign questions, but those are some of the most important and foundational questions that a business owner can ask themselves on a daily basis.
Savodivker: Absolutely. She's not only a true inspiration, but she is an innovator and a game changer. So with that, here's our conversation with Lorena Martinez. Lorena, please introduce yourself.
Lorena Martinez:
Thank you so much, Elian. I have so many ways I'm introducing myself now, but now I say the lady, the hairstylist that quit her job in corporate America, and now she is pursuing what she loves. So I'm a first generation college student immigrant, first person in my family to open a business as well. So I was born and raised in Mexico and I came here when I was 12. I didn't grow up with my parents, so that itself was the first challenge in my upbringing. Second one was coming to the US. I'm really putting my story out there for any other Latinas that may feel that they're in the same boat. And they're like, well, I can't do it because of this. Well, I can't do it because of that. And now I make sure that I mention all of that in my story, so that they feel connected and they feel like they're not alone.
Savodivker: That's great, Lorena. And obviously, you've taken all of that to create the business that you're in now. Tell us a little bit more about what the hair lady does. What is your business? Where are you? Tell us a little bit more about that.
Martinez: Yes. After I quit my corporate job in the Silicon Valley, I opened a first one chair studio. We called it The Colour Bar Salon in Sacramento, California. It was challenging, but it was very exciting. It was like falling in love all over again. That's how I felt, like I was falling in love with something or someone. And we started with one studio chair with no clients. My college friends were my clients and they started recommending me. And I would always ask people, "How did you hear about me?" Like, "Oh, I saw your friend. And I saw this person and that person, and I knew you from college." So I think it was like a bar of trust that they had, they knew of me. And I can also tell you that my story of quitting my job and following my passion was a big, big part of why people wanted to support me.
So thank you everyone, I must say. I still have some of my clients that came with me out of beauty school and they're still my clients right now. And then we grew. So we went to a three chair studio in about six, seven months after I opened the first studio and about two and a half years after that, we moved out of the salon suite concept to a standalone building and it was six chair. And then two years after that, we were renewing our lease and we were trying to compare square footage in different areas. And then my husband saw the Midtown salon for sale. And he's like, what do you think? And I said, no, but then I still went into it. And it ended up being one of the best things that I could have followed because within five years we had two locations.
Now, in the present, we actually have only one location. I scaled down to grow. And what we did is we made sure we scaled down and we focused on what was working in the salon, what wasn't working, so that we could do that and instead... Because my idea was like, we're going to get money and buy a building. And even that, when I was in the program, I remember the feedback that Elian actually gave. He was like, "Well, why do you want to acquire debt to grow? You could use that to scale." And actually we did that. The building across the street from the Midtown location came available. So now this is where I'm at, it's offices and here we pivoted on eCommerce.
Lantigua: First of all, congrats on the super fast growth. I mean that is insane for a startup. You've basically doubled and then quadrupled capacity within two years, that's really fast. In the middle of all of that rapid growth, you also had to deal with state legislation that changed around the status of consultants and freelancers and all of that. And that was the new story around the country because California was taking a step that really divided people, both business owners and workers in terms of who was going to benefit from it. So can you talk to us a little bit about that experience and how you made decisions and ultimately decided to do what you did with your team?
Martinez: Yeah. I can tell you looking back, that was one of the most challenging, scariest, and the most nerve-racking time for our salon. And I think that even helped us a bit in how we managed expectations in the pandemic, because we really needed to get down to the nitty gritty. We were making life changing decisions because the state of California said... First of all, there was even the basic who should be employee, who should be independent contractor, because even in the industry, that wasn't even clear. People were operating in the gray area where they were getting away maybe with giving someone a 1099, that truly should have been an employee. And that's one of the things in our industry doesn't really to get talked about. But I think that's something that we need to address because it's important for businesses to understand that they're putting themselves at risk.
And we had to make a decision and we couldn't just make a decision based on how we felt we should treat employees. We arm ourselves from a labor law lawyer, that was so great. And we said, "This is our vision. Can we do this? And this is how we want to treat it." And she would say, "You can do this, but you can't do that because of this." We've always been employee based. In California, now, the main business structure that salons have is independent contractors. So salon comes and they sublease the chairs to everyone. So in my mind, that's a fixed income that you have and it's comfortable, but that, I also see as a cap. There's only so much that you can make from each salon renter. Then you're also limited on what they can do. And as a salon owner, you're limited to what you can ask them to do.
So the vision that I had for The Colour Bar was to think how cool would it be that we, like myself, a bunch of people would get together and they do what they love and they have fun and they make money from it. It was this very simple vision, but I think that a lot can get in the way of that vision. And it was at that moment, maybe even naive of me thinking, every guy put a bunch of creatives together and they do what they love. And then they live happily ever after. As much as I want to be creatives, we have bills to pay, and we need to make money and we need to make a decent living for us to be happy. Because if we don't have money to pay, then all of our needs are not being met.
Lantigua: Was there pushback from some of the people who were transitioning from being a contractor to being an employee?
Martinez: So this was very interesting. I can tell people how much I love them, but if we don't show them with numbers, they're going to be like, "Yeah, cool. I love you, but I also need to go and..."
Lantigua: Show me the money.
Martinez: ... "and show me the money." And just like any of us. And then we're getting pressure from the employees, "When are we going to hear about the change?" So what we did, we did a PowerPoint presentation and instead of having a big general meeting and telling everybody, we sat with every single one of them individually and went through that PowerPoint presentation and we asked them directly what questions they might have, any concerns.
And we took everything that they had made in the past year and said, "This is your hourly rate." And we make sure that no one was taking a pay cut in terms of numbers, that was the main thing. Some of them, it was really great because especially for the new stylist, what that meant is that before they were working commission, so if they didn't have a client, if they didn't want to stay and stick around, they could go home, but they weren't making money. If they wanted to stick around, I said, I'll pay you the hourly, but you need to be working on something. And so that was the difference. Now, they didn't have to go home and they were going to get paid regardless if they had clients or not. And what that meant was stability for them.
But the hypothesis that I had is that the senior stylist, we're going to look at that and they were going to be like, "Eh, no, thank you. Peace out." Actually, the turnover that we had was the younger stylist, because the younger stylist had the mentality like, "Oh, I could be making a lot more," and they actually jumped ship and some of them came back. They saw everything that it was being independent because they only see in our reports we're very transparent. Everybody can access reports in the point of sales because they need to be able to track their individual performance. So how can they track it if we gate keep those numbers? So we said, "Look at all those numbers and you can calculate and make sure that you don't feel like we're low balling you with this numbers."
And again, the senior stylist, some of them had already come to The Colour Bar because they had been independent contractors before. So they knew how much is to run to chair. They knew about how much they keep, they knew after tax, how much they make. And they could calculate and they can crunch their numbers and come up to the decision that, yes, we were being fair to them in their hourly rate. And they saw some benefits to it. So they saw the value. And one thing that I think... Great thing that came out of it is that before, because we couldn't foresee, we couldn't track as much on the performance because it was commission. Now we could foresee numbers, we could estimate numbers a little bit better and we're able to offer, for the first time ever, paid vacation to our employees, especially the senior ones.
Lantigua: That's amazing.
Martinez: So you get one with paid vacation they're like, "Wow!" And even the first time that they redeemed it, they're like, "So, I just tell you time off?" I was like, "If we would plan in advance and you block your time and the clients know, and even if you need time off, tell the clients you're taking some time off." And that was different because in the industry, it's a little bit frowned upon because everybody focused on performance, you need to make more and more and more. And we say, you're not a robot. You can only do so much work and you need that time to disconnect and to recharge and to just self care.
And I think that for some of the stylists, that was very new and they felt, this feels weird. And when they would come back, they loved that their paycheck hadn't changed or they loved that if it was a slow day, they still were able to make ends meet and they weren't nervous about whether they were going to make ends meet at the end of the month if it would've been with our old commission style.
Savodivker: And so, Lorena, I think this is all great. And you're gearing towards the LBAN research bingo, which is, you're disrupting an industry. You're treating your employees better than anyone else in the industry. I want to talk about capital. This is a big lift, what you're doing, the way you're innovating, the way that you're disrupting, how did you tackle that of, how do we get capital? How are we able to uphold all of these things that we want to do with this new style?
Martinez: This is a very real thing that I want to talk about because a lot of us, the Latinos that first open our business don't really talk about. And it's the relationship that we have with money growing up. And I can tell you, it might sound super cheesy, but I had to heal my relationship with money. I used to think I need to have tons of money to start a business, but I always thought I'll figure it out. So I can tell you that when I started the studio, I didn't think I could get any loans because I was starting. So when I started the studio, my husband said, "You take care of the bills at the studio. I take care of the bills at home." And I can tell you, even accepting help at the beginning... And I think people go through this a lot where they don't want to accept help from families or friends or even banks because they have the fear of borrowing, owing something and it's fear based. And I've changed my mindset to abundance and love.
And when I switched that, it sounds crazy, but just money started coming. The first studio, I didn't pay myself at the beginning, but it was a little bit of fear-based. My fear was like, what if I don't have money to pay bills? But that fear made me work harder. I'm like, "Nope, this is not going to happen." And my big Latina pride was like, "Hell no, I'm not going to ask my husband for money." Because I have always been that strong in independent woman that never asked anybody for money. I've been financial independent since I moved out for college. And my goal was, one day, I want to pay myself the same salary that I had when I was in corporate. Because again, I was trying to in a way prove myself that I could make the same or more money doing hair than in corporate.
And we didn't get a loan until we moved to the six chair salon and we got an equipment loan. But by that time, we had been operating for more than two years and it was really easy. And it was like, I think only a $10,000 loan for the equipment because we didn't want to over borrow, but it was a very safe, very easy process we thought, "We're asking for a lot of money." The bank was like, "10 grand. Okay." Because they saw our record and they saw our receipts and I was like, "Oh, okay." And even me thinking, "Oh, I don't want to owe money. Let's pay this up front." No, you can do it little by little, there's no need, don't run out of cash.
And so again, limiting beliefs. And so I had to kind of heal it and say, I don't have to be fearing that I'm going to run out of money. As long as I'm booked and I was always blessed to have... We've always been able to have more clients than we can handle. Even when a stylist leaves, we open their books to all the clients say, "This stylist is leaving. You can follow them or stay with us. You're always going to be our clients no matter what." And some of them return, some of them still buy products from us, but again, it's abundance mindset.
Lantigua: So Lorena, I want to pick up on this notion of abundance because I clearly see it manifesting in how you scaled your business, but you reached out beyond your business. You actually started to help what some people might consider the competition, other salon owners. How did you do that? Why did you do that? What has been the results of doing that?
Martinez: A couple of years back, we had tapped into abundance and helping our industry by helping salons going through the transition of defining employees or contractors. And we created a workshop, a free workshop for all salons that would be interested in coming and getting their questions answered. So we had done that and we had seen positive feedback, kind of creating a community and helping them. So when the pandemic came along, what we did is we created this Facebook group called, Salons Racing Together. And the whole purpose of it was for us to come together and share. So whatever we were doing, we were also sharing with all the salons that they could sell products that they could sell gift certificates, how to motivate or lift them all up with their employees.
I would get invited to other groups to speak about these. And I would also take one-on-one coaching sessions with the salon owners from different parts of the state, and even out of state and just sharing, "This is what we've been doing. This is our model. This is how we've grown our business. So if you want to do that, go for it."
Obviously, something's working, obviously good things are coming from the way we are leading our salon. And again, it's the love, I'm leading from love, not fear. And even saying that in corporate felt wrong before, and now I said, you know what? I don't even care anymore, I'm owning it. I don't care if people call me super cheesy, I'm owning the cheese. And I give people the daily dose of cheesiness and we talk love and abundance all day long at The Colour Bar. And the staff embrace it, so I'm like, "Hey, you're going with it. Let's do this."
Savodivker: Thank you so much, Lorena, thank you for all the work that you do. You're innovating the industry, you're creating change and you're creating this business that absolutely creates value to our community and to Latinas everywhere. So you are an inspirational story.
Lantigua: Hear! Hear!
Martinez: Thank you. And the program is, always have a forever cheerleader here, I'm always recruiting for everyone.
Savodivker: Thank you so much, Lorena. Juleyka, Lorena was great. It's an old school industry that's always done things the same way. She went about it, changed an industry, was hit with a pandemic and all those changes she made worked out. All that risk paid off.
Lantigua: She had me at, "I quit my corporate job." Because I quit my corporate job to start my business, too. That is the fundamental difference between people who change the world and people who just kind of participate in the world. And Latinos are so socially, economically, and politically conditioned to toe the line, to wait your turn, to ask permission. And that there is really only one way for you to be successful. And she was like, "Okay, I did that, but I'm not happy. So let me go do something I love and in the process, get happy." That is a hundred percent the story of so many incredibly successful people who followed their passion, but who first had to learn the hard way that that American dream rubric does not fit everybody. I love everything about her story and the fact that she also went through it in California at a time where California did something radical in terms of forcing everyone to take millions of contract workers off of the 1099s and onto W-2s.
Savodivker: The amount of things that she had to take on, that law changed, the pandemic. There were so many takeaways from her story. One of the things that I really loved about what she talked about was taking some steps back to be able to take that big step forward. And I think that's such a fear inducing thing to do. And especially as Latinos, to go to family, to go to a friend and be like, actually we're going to be going smaller first so that we can become even bigger. I can't even imagine going to a cookout or to a party and be like, oh, actually we went from three to one or...
Lantigua: Okay, but we have that saying in Spanish, “un paso para atrás, ¡ni para coger impulso!” It is ingrained in us that we don't go backward, we are always moving forward.
Savodivker: And to do that, and to now be at a bigger place, to be just so much more successful, it takes so much risk. It takes so much guts and ganas, super proud of what she's done. And there's so much more there that is going to be happening in the next few years. She's definitely somebody that you want to be looking out for.
Lantigua: Oh, definitely. And it is so motivating and inspiring and energizing really to meet women like her and to get a sense of, that's right I am part of a small army of Latina business women who are going out there and really changing what is possible for us. I'm like, "Let's go, I'm ready to attack."
Savodivker: Absolutely. Absolutely. Latinas are in fact, changing the world and they're changing it from the business perspective. Lorena is one of the many stories that we have at LBAN. So really excited with everything that she talked about, she's doing a tremendous job.
Now here's our Latino business moment of zen inspired by our guest.
Inhale and exhale.
Close your eyes and repeat after me: We live in a loving and abundant world. In both life and business, I give love, support and abundance to others, and I'm open to receiving love, support and abundance from others.
Latino business owners represent an important segment of the US economy. As a whole, we generate $460 billion in revenue and employ 2.9 million workers. According to our survey data, the majority of Latino business owners are paying above minimum wage and Latino business owners report offering equal or higher rates of benefits and opportunities for growth to their employees relative to white business owners.
Savodivker: Inhale and exhale.
We live in a loving and abundant world. Open your eyes now and carry on with your day.
This episode was supported by our LBAN Alumni Founding Sponsors Windrose Vision, VND, and Fig Factor Media.. Scaled: The Latino Business Story is produced by LWC Studios for LBAN. Virginia Lora is our producer. Kojin Tashiro and Elizabeth Nakano are our mixers. Kojin Tahsiro did our sound desig. Paulina Velasco is managing producer. To learn more about the work and research LBAN is doing and our Business Scaling Program at Stanford, please visit LBAN.us, that’s l-b-a-n [dot] us. Thanks for listening. I’m Juleyka Lantigua.
CITATION:
Lantigua, Juleyka and Elian Savodivker, hosts. “Staying True to Your Vision and Values As You Tackle Change.”
Scaled: The Latino Business Story,
LWC Studios., December 5, 2022. LBAN.us/scaled.