Cosmetology Program

Chapter 32: The Salon Business

Salon Ownership, Management & Business Operations|37 Questions|Board Exam Prep

Student Name

Date

Instructor

Score

Vocabulary Matching

Match each numbered term with the correct lettered definition. Write the letter in the blank.

Terms

1.Business plan

2.Demographics

3.Sole proprietorship

4.Partnership

5.Corporation

6.LLC

7.Overhead

8.Profit and loss statement

9.Inventory management

10.Insurance

Definitions

A.A written document describing the business concept, target market, financial projections, and strategy

B.A business owned by two or more people who share profits, losses, and management

C.A business owned by one person who is personally liable for all business debts and obligations

D.The fixed operating costs of a salon, including rent, utilities, insurance, and supplies

E.Professional liability, property, and worker's compensation coverage required for a salon business

F.A financial document summarizing revenue, costs, and expenses to show net profit or loss

G.A legal business entity separate from its owners, providing limited liability protection

H.Tracking, ordering, and managing products and supplies to prevent shortages and minimize waste

I.A business structure combining the liability protection of a corporation with tax flexibility

J.Statistical data about a population used to determine the target market for a salon

Fill in the Blank

Complete each statement with the correct term or phrase.

Question 11Fill in the Blank

A plan is a written document outlining the business concept, target market, and financial projections.

Question 12Fill in the Blank

are the fixed costs of running a salon, such as rent, utilities, and insurance.

Question 13Fill in the Blank

A sole is a business owned by one individual who is personally liable for all debts.

Question 14Fill in the Blank

An is a business structure providing liability protection with tax flexibility.

Question 15Fill in the Blank

data helps salon owners understand their target market's age, income, and lifestyle.

Question 16Fill in the Blank

A profit and statement shows whether a business made or lost money.

Question 17Fill in the Blank

management ensures products and supplies are tracked and reordered before running out.

Question 18Fill in the Blank

Professional liability protects salon owners from claims related to services performed.

Multiple Choice

Select the best answer for each board-exam style question.

Question 19Multiple Choice

A business plan is important because it:

A. Is optional for successful businesses

B. Outlines the concept, market, finances, and strategy

C. Replaces the need for a license

D. Is only for large corporations

Question 20Multiple Choice

An LLC provides:

A. No legal protection

B. Liability protection with tax flexibility

C. Only tax benefits

D. Unlimited personal liability

Question 21Multiple Choice

Demographics help a salon owner:

A. Choose a paint color

B. Understand and target their ideal client market

C. Avoid paying taxes

D. Skip business planning

Question 22Multiple Choice

Overhead costs include:

A. Only employee wages

B. Rent, utilities, insurance, and fixed operating expenses

C. Client tips only

D. Product sales revenue

Question 23Multiple Choice

A sole proprietorship means:

A. Multiple owners share liability

B. One person owns the business and is personally liable

C. The business is a separate legal entity

D. There is no owner

Question 24Multiple Choice

Good inventory management helps by:

A. Increasing waste

B. Preventing shortages and minimizing waste

C. Eliminating the need for suppliers

D. Reducing client satisfaction

Question 25Multiple Choice

A profit and loss statement shows:

A. Only the salon's expenses

B. Revenue, costs, and net profit or loss

C. Just the number of clients served

D. Employee satisfaction scores

Question 26Multiple Choice

Professional liability insurance protects against:

A. Employee theft only

B. Claims related to services that caused injury or damage

C. Building maintenance

D. Personal car accidents

True / False

Write T for True or F for False in the blank.

Question 27True / False

A business plan is unnecessary if you have enough money to open a salon.

Question 28True / False

An LLC provides personal liability protection for the business owner.

Question 29True / False

A sole proprietor has unlimited personal liability for business debts.

Question 30True / False

Demographics include information about age, income, and lifestyle.

Question 31True / False

Overhead costs are variable and change with each client served.

Question 32True / False

Professional liability insurance is optional for salon owners.

Question 33True / False

A partnership means profits and losses are shared between owners.

Question 34True / False

Inventory management is only important for product-based businesses.

Short Answer

Answer each question in 2-3 complete sentences.

Question 35Short Answer

Describe the key components of a salon business plan.

Question 36Short Answer

Compare the four main business structures and their advantages and disadvantages.

Question 37Short Answer

Explain the importance of location selection and demographic analysis when opening a salon.