In consistently turbulent times that trigger increased salon costs, managing your salon finances is especially critical. Here, business consultant Phil Jackson from Build Your Salon offers a few simple moves to remain profitable and protect your business through these difficulties.
“Firstly, review your prices. I’m hoping you do this regularly anyway, but I’ve heard of a few salons that are delaying their pricing review ‘until things settle down’. To be blunt, things won’t settle down any time soon and you run the risk of running on reduced profit in the meantime,” Phil said. “Holding out to see what your suppliers are doing could mean delays of weeks or even months. Far better to decide your prices on the information you have now and make an educated guess on what might happen in the next couple of months. Then implement any changes sooner rather than later.”
Phil has some advice in managing these price reviews, which can put off clients, such as doing six-monthly price reviews for smaller increases, or even changing sooner than that to ensure you stay afloat.
“Changing prices is far easier if you have made the decision to finally ditch physical price cards,” Phil added. “Make your pricing available online or alternatively, if you have something you want to physically give your customers, exclude the prices and instead provide them with a link or QR code where the latest prices can be accessed. That means that changing your prices is a simple two-minute job rather than paying hundreds of pounds for a print run of price cards. It’s also friendlier to the environment than binning a box of unused cards.”
Other essential practices include encouraging online bookings, which show the latest, up-to-date prices at the point of booking and for consistent, 24/7 bookings. An additional booking fee can reduce no-shows.
“Finally, take the opportunity to review your costs,” Phil advised. “Some increases are unavoidable but shop around as much as you can for utilities and other supplies. Even 1 per cent of costs saved can make a massive difference to your profits over a year. Sadly, we can’t exclude wages from this review. If you set your commission to an affordable level a few years ago but your fixed costs have increased, either your variable costs (including commission) will need to reduce or you are going to have to reduce your profit margin. Remember to take legal advice before making changes to contracts or pay.”
“There is currently an affection for small businesses and salons that means your customers are less price sensitive. The best way to weather a financial storm is to remain nimble, adapt quickly and keep a firm grip on those things you can control,” he concluded.
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