Salon business expert Paul Pagliaro offers decision-making tips for the top challenges that salon businesses are facing.

1. People Management

Is your salon being run by a team that supports your business goals, makes your customers feel welcomed and valued, and willing to improve?

“Ensure that collective staff goals support your business goals. If you want to generate a certain profit, each stylist should have a target so that the sum of those targets meets the business objective,” says Paul Pagliaro, president of Milano Software. “Once you’ve established each person’s goals, track them in real-time. For example, if an employee has a retail goal of $80 for the day, and he’s worked half the day and made $25, then he’ll be able to adjust the rest of his day to hit the target. And it’s better to know that during the day than at the end of the day when it’s too late.”

Self-check: How well is your communication with your staff? Are you meeting on a weekly basis about reaching your goals? As an owner, are you open to feedback as well?

2. Client Service

How is your salon providing the best customer experience?

“The key to great customer service is to do something that’s different,” says Pagliaro. “For example, give a small dessert to your clients or give them a hand massage while they are having a hair service. No one else does that, and you’re giving them an experience that they will talk about,” he says. Another method is to communicate with your clients on a regular basis. “Send an e-blast with messages that are relevant, but be sure to show a clear benefit or promotion, and call to action.”

Self-check: When was the last time you asked your customers about their visit? Ask new customers for feedback as well, because they are more critical than loyal customers, who tend to overlook a few mistakes.

3. Retailing

Where are the missed opportunities to increase revenue with retail sales?

“Retail revenue generates four times the profit of service revenue,” says Pagliaro. “Yet the industry average is to sell 8 per cent in retail revenue. The way to improve this is to make sure you carry the right retail lines for your client demographics.” Is argan oil the hottest retailer in your salon? Or maybe it’s dry shampoo. “Reorder your hotselling items on a regular basis. It’s about selling more of the same product and more frequently, not necessarily refilling stock when a certain bottle reaches a minimum inventory level,” says Pagliaro.

Self-check: You know you need to improve on retail if retail sales attribute to less than 8 per cent of total revenue. Do you have the right products on your shelf? Are they being sold at the right time? Is your staff trained to up-sell?

4. Financial Management

Do you know where your money is going?

“It’s critical for salon owners to prepare a budget three months before the next financial period. That way, they have a good idea of what they want to accomplish, which allows them to track and measure the company’s progress,” says Pagliaro. And knowing the full financial picture means knowing how much revenue is generated, where the expenses are, and the proportions of each of those expenses to the total cost. It’s also important to track your salon’s budget, and capture real-time data against your long-term goals.

Self-check: Is rent more than 10 to 12 per cent of total expenses, and payroll more than 42 to 45 per cent? If cash flow is a challenge, financial management might be a good area to improve on.

Does your salon have an overarching business goal to feed your path to success? It should, says Pagliaro. “It’s key for the salon owner to develop an overarching objective and develop a five-year plan,” he says. “If you visualize where you’ll be in five years, then you’ll have a better chance of meeting those goals and focus not only on what’s going on in your business, but what’s going on in the industry, social media, and other things that might affect your business.”