With the recent minimum wage increase in Ontario—and another one on its way next year— many small businesses are shifting gears to accommodate this major change. But for salon owners, it can be an opportunity. We spoke with two business experts for their advice on how to make the most of it.
There are many factors to consider when owning a salon. And sometimes there are things that are just out of your hands—whether it’s a rent increase or,
in this case, a hike in your province’s minimum wage, there is added pressure to ensure your business is (and remains) profitable.
“For salons, 50 per cent of revenue goes towards labour costs,” says Rowena Berry, western divisional manager for Schwarzkopf Professional Canada. “And while most salons are commission-based, if some employees are paid hourly or hourly plus commission, it does have an impact. Now is a good opportunity to take a step back and look at your business more objectively.”
While increasing service prices may be your first course of action, it’s not always ideal, especially when you’re trying to retain existing clients and gain new ones. According to Elizabeth Hazime, key relationship manager for Kao Canada, offering upgrade menu options may be
a better alternative. “Let’s not look at the problem, let’s look at the solution,” she says. “Introducing upgrade menus that include five- minute services, like a serum treatment, that can be added to any salon service. These have been proven to be successful to increase revenue.”
Hazime, who works with market leader salons across Canada, says it’s all about being solution-oriented. “If we just focus on minimum wage, it can become very negative and people start to wonder what they can do to change things or cut back on things, and it’s not about that,” she says. “At the end of the day, it’s all about building and understanding your business.”
The last thing you may want to do right now is hire more staff (if you don’t need to), but for larger salons it can be an opportunity to assess how each role helps make the business profitable. “Think of ways to create balance while setting a new standard for hiring,” says Berry. For example, for salons that are departmentalized (with specific team members dedicating to cutting, colouring and styling), Berry suggests cross-training. “If you cross-train and have to make cuts to your team, you’re not going to find yourself short-staffed,” she says. “Less is sometimes more. It’s not about how many people you employ, it’s about how profitable your business is.”
For many salons, the front-desk area is likely be most affected by the minimum wage increase, since employees are often paid hourly. However, Berry says it’s an area of the salon that should not be overlooked. “We always stress the importance of a good front desk person because it’s the first and last person a client sees.”
Some salons have even decided to invest in their front desk employees, providing them with a coordinator or management role and a salary as opposed to an hourly wage.“ Every salon owner should strive to ensure that everybody can earn a decent living,” adds Berry. “But if you’re raising the pay, for that role, you’re also raising the standard of that employee, in terms of their level of experience. It can be good for business because you’ll have a more qualified person running your front desk.”