From keeping up with rising costs to navigating changes in consumer behaviour, many salons continue to be challenged by the costs of doing business.
While it might feel easier to stay in your comfort zone when it comes to managing your salon, being stagnant in today’s economy can lead to detrimental results.
“We’ve been seeing a lot of challenges with clients,” says Jennifer Foo, a business coach with Inspiring Champions and owner of X-treme Creations Hair Company in St. Albert, Alta. “There’s been a shift in how people are getting their services and how often. People are stretching their appointments out with more lived-in colour, so there’s a longer time in between appointments. We go from having a small, focused client base to needing a much larger one. When you multiply that by the number of stylists and salons out there, it’s generated real concern as to how we get people back in the salon more often.”
“People have changed since the pandemic,” adds Geno Stampora, an award-winning industry expert, salon consultant and keynote speaker based in Virginia. “People don’t just want to spend time in the salon; they don’t want to spend time anywhere. They’re constantly looking at their watches, and choices have increased. It’s easier than it’s ever been for consumers to find a place to get their hair done.”
Embracing Change
While it can be difficult to look at your business (and yourself) with a critical eye, doing so can help you spot areas where you may be able to be more profitable.
“Until a beauty professional looks at their business as a business, they’re costing themselves money every day,” says Stampora. “If money is ever an issue, you have to look back at yourself and ask, ‘Am I costing myself money because I’m not selling product, upselling my menu or charging enough?’ Even if you’re an employee in a salon, you have to take responsibility for your business.”
“Everyone gets so caught up in not understanding change because they get so deep into their comfort zones,” he adds. “It’s not just the future of beauty; it’s the future of profitability and flexibility.”
There are a number of areas to look at to ensure that you’re maximizing your profitability, such as expenses, pricing, staffing and services, and it’s recommended to carefully look at each one to discover areas that could use some improvement.
PRO TIP
FOR SALON OWNERS WHO MAY BE CONCERNED ABOUT HOW ON-DEMAND PRICING MAY BE PERCEIVED BY THEIR CLIENTS, FOO SUGGESTS CONSIDERING A “HAPPY HOUR” MODEL INSTEAD, WHICH OFFERS SERVICES AT A LOWER PRICE POINT ON SLOWER DAYS AND TIMES DURING THE WEEK (INSTEAD OF AT A HIGHER SURCHARGE FOR PEAK DAYS AND TIMES).
1. Expenses
With the rising cost of goods, finding ways to stay on budget and limit expenses is key to financial success. “The cost of doing business is more expensive than it has ever been before,” says Stampora. “People are smarter shoppers these days, but the biggest issue is waste. Running an efficientsalon would mean to not waste water, products or colour, and this comes down to the salon’s culture. I believe you have to create a culture where everyone takes responsibility to become cost-conscious and reduce waste.”
Since some expenses, such as the cost of hair products and colour, are vital to your salon business, there are ways to ensure that you’re staying on budget.
“Streamlining inventory was a huge cost reducer for us,” says Robert Cromeans, a salon owner based in San Diego, Calif., and global artistic and business director for John Paul Mitchell Systems. “We use a formula for our budget based on what we sold the month before so that we’re not buying using emotion; we’re using numbers to dictate.”
Cromeans also suggests using five to seven per cent of your product budget on the backbar and to consider redeeming your points from manufacturers’ rewards programs for product purchases to help keep costs down.
Since rent can be a huge burden for owners who are trying to keep their businesses afloat in this economy, it’s important to ensure that you have a good understanding of your numbers while maximizing your salon’s space.
“The rent-to-service revenue proportion can become quite large, making it difficult to see a profit,” says Cromeans. “It’s so important to know your numbers and understand the cost of goods and everything that comes with running your own business. Focus on goals and targets, starting with one guest at a time—daily, weekly, monthly, quarterly and yearly—so you can continue to grow. Numbers don’t lie, and they influence behaviour.”
2. Pricing
As the cost of living increases, so should the prices of your services. While an annual price increase of three to five
per cent is standard, Foo suggests also reviewing your pricing based on demand. “I like to use a booking percentage,” she says. “If you’re booked 85 per cent of the time—or more—and your pre- booking is at 80 per cent or more for six months or longer, those are key indicators that you can successfully raise your prices by 10 per cent and mitigate the risk of losing clientele.”
While some stylists work toward a goal of being unable to accept new clients, Foo says that accepting new guests is important for business. “If we’re not consistently raising our prices when our demand is high, we’re not really allowing the opportunity for any new guests who are willing to pay the higher price point to be added to our books.”
Speaking of higher demand, the idea of demand-based pricing—where the prices for services fluctuate based on specific times and days throughout the week— continues to have its pros and cons. For Mario Verrilli, owner of Onaré Salon in Mississauga, Ont., and author of The Fall of the Hair Salon, on-demand pricing is a concept he’s seriously considering. “I love the idea,” he says. “It encourages clients to book at slower times so that you’ll fill in the gaps in your schedule and your books will always be full.” “This is business, so I don’t feel that there is anything wrong with this model,” adds Cromeans. “However, I’d say the most important part is being transparent with the guest and making sure they have a clear understanding of the pricing structure.”
3 Staffing
Since the pandemic, staffing has been a challenge for many salons. Whether it’s retaining staff or hiring new members, it’s a widespread problem that has had an impact on salons of every size.
“If you’re looking to hire new staff, your salon has to be attractive to them,” says Stampora. “Salon owners and managers should take a break for an hour and walk in the salon like a new [stylist] and ask themselves if they would want to work here and why. What does their salon offer? Is there a career path?”
Since traditional salons are now competing with suites and the rise of independent hairstylists, flexibility continues to be a key factor for many stylists. While salon owners may feel bound to the demands of their staff, there are some creative ways to help find a balance that’s a win-win for both parties.
One example is the idea of shared workstations, which can help with hiring (and retaining) staff members who only want to work a specific number of hours each week.
“The idea of a 40-hour workweek is becoming a thing of the past,” says Stampora. “Some people will want to work that way or more if they love their work, but most businesses need to focus on the fact that those days are over. Now, it’s a matter of how we fill in those gaps with part-time people.” In addition to finding ways to accommodate a work-life balance, it’s important for salon owners to provide opportunities to remind staff of the benefits, such as mentorship and education, which aren’t as easily accessed outside of the salon.
“Just like you want to lock in your clients, you have to lock in your employees by really taking care of them,” says Stampora. “You can keep your employees for a long time if you create an environment for them to be as successful as they can be.” “At the same time, you have to be fair,” he adds. “We just need to find a way to pay people well. You don’t want to give your employees a chance to shop around [for a new job].”
For stylists who may be interested in more autonomy, Verrilli suggests implementing an hourly chair-rental model, which essentially allows stylists to explore a more independent approach while still retaining them within your salon.
“I’m seeing this in major cities like Toronto, New York and London,” he says. “It’s different from traditional-chair rentals, where they sign a lease, and the mindset is that they can do what they want. With a by-the-hour model, they can’t do that. They are self-employed but work on a commission structure.”
“A lot of salon owners fear that they won’t make as much renting and that it’s going to change the culture,” he adds. “I’ve implemented it and I find that it gives stylists a chance to see what’s involved [in running their own business]. Some might love it, while others might decide they want to go back to being an employee. It avoids all this shuffling around and flips it in a positive way. We’re working in collaboration rather than in competition and without disrupting the salon’s culture.” In addition to helping to retain staff, looking for ways to offer more independent opportunities within the salon can help with retaining clients. As stylists leave salons, some owners fear that clients may follow their stylist.
“THE BIG PROBLEM IN THE BEAUTY INDUSTRY IS THAT PEOPLE WHO GET ‘GOOD’ GET IN THE WAY OF BEING ‘GREAT.’ YOU CAN MAKE GOOD MONEY, BUT IF YOU CAN MAKE GREAT MONEY, YOU SHOULD TRY TO DO THAT.”—GENO STAMPORA, AWARD-WINNING INDUSTRY EXPERT, SALON CONSULTANT AND KEYNOTE SPEAKER, VIRGINIA, U.S.
Software Solutions
Learn how software can be a priceless expense for your business.
Since many salon owners have more of a beauty background, having access to the right tools to help with managing their business is key.
With the evolution of companies such as Phorest and Square, whose offerings now extend well beyond appointment management and payment processing, salons can now use software to help with everything from client outreach and social media marketing to reporting and employee management.
Shelby Turner, co-owner of The Attic Hair Studio in Vancouver, began using Square five years ago to help manage her business.
“We integrated our payment processing with appointments and just knew it was going to be the way things were going,” says Turner. “I would rather pay for one program to do it all. There’s a waitlist, timecards for employees to sign in and out, reports and website building.”
A few of Square’s latest features include email marketing, an integrated Slack feature and a loyalty program to help with client retention.
“We haven’t delved into it yet, but email marketing with Square is something we’ll be trying this year,” she says. “We can see our returning clients and ones who haven’t come in, so we can send emails to our clients, which is massive to be able to send direct emails to exactly who we want to send them to.”
Square’s features have also helped offset the need for a front desk or receptionist, which Turner says they decided to eliminate after the pandemic.
“We realized it wasn’t the career job for somebody,” she says. “It was really hard to keep someone in that position. We found that the stylists would dump off some of their responsibilities on the front desk. Now, stylists have to check their clients out and be comfortable explaining the costs to the client. We put the power back into the stylists’ hands.”
As a salon owner and coach with Inspiring Champions, Jennifer Foo agrees that software can be great for business. “It’s a really positive thing,” she says. “It’s going to give you all your reports and numbers. There are also a lot of marketing aspects, so you can send out emails for open appointments and make suggested sales.”
“There’s so much feeling that goes into this business, so I really like to push people to look at the facts,” she adds. “Numbers don’t lie—they’ll tell you the truth and continue to help you stay accountable.”
Industry expert, salon consultant and keynote speaker Geno Stampora was one of the presenters at Phorest’s 2024 Salon Owners Summit. “You can’t beat using good software,” he says. “It’s going to give you the numbers you need to look at, and that’s priceless.” Robert Cromeans, a salon owner and global artistic and business director for John Paul Mitchell Systems, uses software to not only help keep track of past revenueand data but also plan for future business.
“A salon software system is imperative for both employee-based salons and freelancers,” he says. “We can see how much revenue is on the books for a day, week, month or year. It’s a great coaching tool to help see opportunities to increase service revenue.”
4. Services
Looking for ways to increase profitability should also include reviewing your service menu to identify opportunities to add (or eliminate) services.
“We’ve been seeing some salons begin to offer boutique items, as well as express services to get people in quicker,” says Foo, who adds that luxury scalp treatments and memberships for services are also trending in the industry. “Controlling your expenses is the biggest thing. If you can operate within a budget and really understand your expenses— where to spend and where to pull back— that’s huge.”
While adding value to a client’s experience in the salon is top of mind for many owners, who are looking for ways to differentiate themselves from their competition, it’s important to ensure that these add-ons also benefit your business.
“The biggest thing to keep in mind is if it makes sense financially, depending on client base, demand and if you have the time for it,” she says. “It’s about being conscious about being budget-focused and understanding your profit margin and ways to control expenses.”
As for retail, which many stylists continue to struggle with, Stampora says it’s about rethinking your approach.
“Selling is a direct exchange of passion,” he says. “If you believe in it and are passionate about it, it’s not as hard to sell it to your clients. People use being pushy as an excuse; I’m talking about being persuasive. You are the professional, and if you understand the products and add-ons you’re selling, it’s very easy to communicate that to a guest and help them understand that it’s worth it for them.”
“Part of our profession is being able to make recommendations and provide solutions, and that doesn’t start and stop in the chair,” adds Foo. “Make recommendations on what clients can use at home, and give them the tools and knowledge on what you’re using so they can replicate it at home. We know how the products work, so we’re doing a disservice to our guests by not making those recommendations. If they still choose to not purchase, it’s completely up to them, but it’s really important to educate our clients so they know that purchasing from us supports our small business and allows us to further our education. It’s not about selling; it’s about educating.”
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