Every little helps

From keeping your salon’s laundry costs down to helping with budgeting and planning, we talk to some of the industry’s experts to find out how to best manage expenses.

What does the cost of living crisis mean for your salon? After a turbulent few years and the pandemic bringing with it an array of unwelcomed challenges, the soaring energy costs and rising inflation is undoubtedly difficult to navigate through.

Budgeting is important to every salon, small or large as it allows you to plan expenditure based on expected revenue and permits you to set financial targets for the salon and individual team members.

Joanne McArdle, Company Director at Pink Butterfly Accounting Limited, said: “Having a clear indication of your financial goals at the beginning of your economic year will give you greater control over your money and spending.”

Joanne advises working with an accountant to help implement your budget and be sure to track actual figures against the budget on a regular basis to ensure measures are put in place to control expenditure and drive sales.

Identifying key areas of expense which could be cut down on in a salon environment is a great way to not only stay afloat but to flourish in what are deemed as tricky times.

Joanne explained: “Controlling stock levels and product wastage ensures that you are not overspending on the direct costs relating to your services.

Monitoring staff utilisation rates is a key indication on whether your business is over or understaffed.”

Staff costs and direct product outlays are typically the two biggest costs a salon will incur, so Joanne advised that by ensuring these costs are in proportion to turnover is essential if you want to achieve a successful and profitable salon.

Whilst managing costs is important, it’s worth noting that quality shouldn’t be compromised and Joanne understands that it can often be a temptation to cut corners on product purchases and buy cheaper brands to increase profit margins – however, this is not the answer.

Ultimately, the quality will always show in the end results for your client: “If your salon is struggling to achieve the right profit margins after assessing your costs, then your pricing may not be set correctly. In situations like this, you should work with your clients to work out the cost per hour to open the salon and price services accordingly.” Explained Joanne.

With the saved costs acquired through making more conscious decisions could be invested in other areas of the business to boost the overall reputation of a salon.

Joanne advises offering the latest treatments that everyone is shouting about as it will increase your reputation as a go-to salon: “Investing money into staff training surrounding these services is essential to make sure your team can deliver the level of service you are marketing to your clientele.”

Owner of Leah Durrant Hair and Beauty Re:Treat, Leah Durrant, explained how in her salon they find using disposable towels such as Easydry help to make a significant saving on energy and water bills.

Leah sees the importance of knowing your numbers when running a business and recommends looking at all your costs, everything from wages to products and see where you could make changes to help manage budgets: “Is there a lot of colour wastage, dead stock on the shelves and are staff hitting their targets to cover the wage bill? Reviewing your costs and adjusting accordingly could save you thousands over the year.”

Leah advises making sure you are using your products correctly and don’t over order. By keeping an eye on product usage, you can make sure that there’s as little wastage as possible saving you money and making products last longer.

As a business owner, it’s easy to feel panicked with costs rising and choose the cheapest option out there. Shopping around for cheaper energy suppliers is important and definitely advised, but Leah highlights how she would never compromise on the quality on the products she uses. Cheap products will be evident in your clients’ hair and, in turn, this won’t be good for your reputation: “Make sure you are pricing correctly, upselling services to include treatments and retail sell and package services that boost revenue but add value for the client.”

In Leah’s opinion, investing in a salon coach will help keep your business on track, manage your budgets and provide you with guidance to build the best salon for you and your team.

Leah added: “People ask me why I still invest in business coaching when I have been running salons for 18 years. It is because you never stop learning. The industry is constantly evolving and you have to move with it to survive. A business coach is someone who isn’t emotionally invested in your business and can therefore give you honest, nonbias and constructive advice.”

Whilst saving costs is important, Salon Director at F&M Hairdressing, Brian MacMillan, shared his advice on getting the balance right between price and quality, as he said: “From experience, it’s all about research and being open and honest with your suppliers. We are all in the same boat in terms of rising costs, inflation and clients not spending as much as they used to, or spending over a longer period of time.”

Having been in business for over 21 years, Brian and his team have established a great business routine and group of suppliers who they love working with. The suppliers understand the team’s values and it is important to keep these relationships: “They are providing us with great quality, which we then pass on to the clients through our salon and services, therefore we want to maintain this standard as much as possible.”

With marketing being one of the sole drivers of traffic to a salon business,

Linda Stewart, Co-Owner of Rainbow Room International with Alan Stewart, advises any saved costs to be invested in to marketing budgets to help build your salon’s reputation. Marketing plays a huge role in attracting new clients and retaining loyal clients. It’s also a great way to spread the word on what you are doing in the salon, the work you have created, products you are stocking and any offers you are running. Marketing can be anything from text messages, emails to newsletters, newspaper adverts and also paid for social media ads.

“Try something new and see how you get on; you may end up attracting a lot more clients to the salon. Also be sure to use platforms such as Google and Facebook to gain client reviews. Having fantastic reviews is essential in building credibility and trust and many clients now look at salon reviews before choosing whether they want to visit.” Added Linda.

Co-Founder of Zolmi Software, Paul Belliata, highlighted shower heads for backwash basins as an ideal costeffective appliance, which could be introduced to a salon: “There are a number of shower heads for backwash basins that can reduce water usage. Secondly, hair dryers - find those appliances which are using less energy. Sometimes hairdryers will look more expensive upfront but long term they are more cost effective.”

Many salons don’t realise the true cost of not retaining clients through delivering a great customer experience as having poor customer retention has a huge impact on a salon’s cost.

Paul also added: “In these testing times, you should work to improve staff retention - like customer retention, if a salon has poor staff retention this has a direct impact on costs as your new staff member will not be profitable until they have a full book.”

Paul’s final tip in navigating your way through the current cost of living crisis it to make regular stock takes as he is aware that some salons often don’t carry out stock takes on a regular basis. Stock can go missing, expire or be hidden at the back of the cupboard: “One hour every month is a great use of time to help reduce costs.”

In line with Paul’s commentary on investing in cost-effective additions to a salon, Tyler Moore, Expert Stylist for Live True London agreed that using energy efficient machines is important to keep an eye on costs: “One simple but effective measure you can introduce is using a timed setting for heating to prevent energy overuse. Make sure to remind your staff to wait until dishwashers or washing machines are full before using them, and better still, hand wash and air dry.”

In Tyler’s opinion, it’s always best to reduce ‘behind the scenes’ costs before those that could affect your clients and stylists. For example, he explained how you could use a comparison site to source the most affordable energy provider for your business and cut costs there; “But you shouldn’t skimp in other areas such as your salon products to ensure you’re maintaining a high quality.”

Instead of focusing on driving up revenue to max up profits, more and more salons are controlling costs by introducing Vish technology. Colour is one of the biggest salon expenses, yet data shows as much as 40% is thrown away after an appointment because stylists automatically over-mix. For the average salon that represents almost £15,000 of colour mixed by the stylists but never used. But when using Vish technology stylists quickly learn how much they need for each client and mix just that amount.

“So much focus in our industry is on how to drive up revenue, but if you can bring down costs, it can have a much greater impact,” said Toby Dicker, owner of The Chapel Group. He and his team monitor how much colour is dispensed by using Vish Colour Management: “My focus is on usage and waste. If we can keep colour costs down to around 6-8% of sales, then I’m happy with that. I watch my Vish data in real time, and if someone’s usage is creeping up, I will swoop in and deal with it swiftly.”

Vish identifies how much colour is needed for a service and if more is required because the hair is very long, thick or porous, it can trigger additional charges automatically to safeguard costs. It means every service has a level of guaranteed profit, enabling owners to forecast and budget long-term. It also captures any additional services such as toners, delivered by stylists but often left off the final bill. Data from Vish has shown this can lead to an immediate 15% uplift in revenue.

“The industry throws away 6.8 million kg of colour each year. That’s not just bad for the environment, that’s bad for those salons paying for all that colour wasted,” said Joshua Howard, founder and CEO of Vish. “It represents millions in unnecessary costs and explains why so many salons struggle to make a profit with colour. It doesn’t need to happen. When stylists stop over-mixing and Vish captures every gram of colour or product dispensed, salons see an immediate uplift in revenue and profit.”

Measuring colour by weight and reweighing waste is unique to Vish and allows stylists and salons to actively reduce waste and costs. Its integration with all the major salon software systems is what allows additional product to be costed and shared automatically with the front desk, freeing the stylist from the responsibility of communicating any extra charges. The drain of colour or product that goes out of the salon without being charged for is stopped forever.

Joshua explained how over-mixing colour can lead to over-application, which can compromise the end result, while not mixing enough wastes time as the stylist abandons the client to mix more. Using Vish technology the stylist can see the quantities used at the previous appointment and follow the recalibrated Vish formula to mix the correct amount required.

“For new users, it is easy to track and monitor progress, making adjustments against goals to ensure a positive return on investment.” Joshua finished.

Navigating through these tricky times can be difficult when you have a business and reputation to uphold but leaning on industry giants and experts is the way forward. Always ensure your source is reputable and if you need any further details on the information we have shared, please feel free to get in touch –we would love to hear from you!

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