Business Spotlight: The Business of Beauty

Midway through college at Missouri State University, Stephanie Sheets realized she wasn’t working toward her ambition of owning a hair salon.

“I was told it was not a real job,” Sheets says.

But in 2009, she enrolled in classes at The System Inc. She graduated Dec. 21 and is ready to pursue her dream in the St. Louis market.

Creating stories such as Sheets’ was the dream of primary owners Schrene and Clint Davis and Stephanie and Greg Kellogg when they opened The System with 45 students in October 2005. The Davises and Kelloggs own 40 percent of the school apiece, while George and Linda Bush own 10 percent and Paul Ebisch owns 10 percent.

The System ended its first year with 124 students and the school, a Paul Mitchell Partner School, completed its fifth year Oct. 17 full to capacity at 152 students and nine instructors working in the 52-seat salon, 3017 S. Kansas Expressway.

Cut out for ownership
From the onset, Stephanie Kellogg and Schrene Davis desired to teach cosmetology but also give students a firm foundation of business skills to help them operate salons upon graduation.

“They honest to goodness had a dream of changing the way cosmetology was taught, and Paul Mitchell was on the cutting edge of cosmetology education,” Greg Kellogg says about the franchise partnership that was formed in 2005.

School officials say about 20 percent of the students curriculum covers business skills such as accounting, bookkeeping and résumé preparation.

“In order to be successful in business and actually make money out there, they need to learn more than just how to style somebody’s hair,” Stephanie Kellogg says.

The System also stresses the importance of community involvement, having donated $50,000 in its five years to groups including Children’s Miracle Network; Andrew Gomez Dream Foundation, a Paul Mitchell development nonprofit for young professionals; Leeza’s Place, a nonprofit offering support for caregivers to people with chronic illnesses; and the Larry King Cardiac Foundation, which funds cardiac procedures.

The System leases its 10,500-square-foot space in Kansas Station from Pennock Development LLC for $9.50 a square foot. The school has operated there since Day 1, but its owners have for two years considered a downtown site.

“We think the creative center of Springfield is downtown,” Greg Kellogg says. “We’re a creative school.”

In early 2009, the owners had lined up nearly $500,000 to finance a move, but withdrew its loan application and backed off the plans. Kellogg says there are nearly three years remaining on the company’s Kansas Station lease.

Student aid and interests
Kellogg says the school’s biggest accomplishment was achieving accreditation from National Accrediting Commission of Cosmetology Arts and Sciences in March 2009.

The accreditation allows students to receive government assistance such as direct Stafford loans to pay tuition, which is $9 per credit hour and constitutes the bulk of revenue for The System.

“We did pretty well when we first opened because the economy was still well and students could get private loans to go to school,” Stephanie Kellogg says. “About the time the economy got bad, private lending for schools, especially privately owned schools, kind of dried up.”

Kellogg said 70 percent of The System’s revenue comes from tuition. Services such as haircuts, styles and coloring account for 23 percent, and Paul Mitchell retail product sales make up 7 percent. The Kelloggs declined to disclose annual revenues.

The 1,500 classroom hours needed to finish the school’s program can be completed in 10 months, while part-time students require 18 months.

Student interest continues to be high, Greg Kellogg says.

“Generally, we get about 50 to 60 Internet leads a month,” he says. “People are looking for trades where they can go out and get a job quickly.”

The U.S. Bureau of Labor Statistics projects the job growth rate for cosmetologists at more than 20 percent between 2008 and 2018. The BLS reports median hourly wages of $11.13 for hairdressers, hairstylists and cosmetologists.

In 2009, Kellogg says The System recorded a 100 percent state board passage rate, a 91 percent student completion rate and an 80 percent placement rate.[[In-content Ad]]